Stablecoin vs. crypto: Balancing stability with growth potential

Volatility is the one thing that traders both fear and adore. If you’re somewhat familiar with the crypto market, you’ll know that volatility can be a double-edged sword in the arena that is crypto trading. From dizzying highs to staggering lows, gains and losses can be made in an instant, thanks to the inherent volatility within the crypto space. Fortunately, digital assets such as stablecoins aim to mitigate this risk by providing a more dependable alternative within the crypto trading ecosystem.

While you might know what stablecoins are, and that they’re typically used as a means to facilitate crypto trading, there’s certainly more than meets the eye with this type of pegged asset. From their unique role in decentralized finance (DeFi) protocols to their place in the ever-changing regulatory landscape, this article will explore how stablecoins compare to other cryptocurrencies — and what awaits them in the future.

Key Takeaways:

• Stablecoins are digital assets designed to maintain a stable value by being pegged to an underlying asset, such as a fiat currency, commodity or basket of cryptocurrencies. 

• Cryptocurrencies are decentralized digital assets that operate within blockchain technology, and use cryptography for security. 

• While stablecoins and cryptocurrencies both utilize blockchain technology and exist within the realm of digital assets, their fundamental purposes and characteristics significantly diverge. However, they also share certain commonalities that warrant closer examination.