As the name suggest, Stable coin value is expected to remain stable i.e. not volatile as other Crypto currencies.

Stable coins derive value from other assets, mostly non-crypto assets.

Example – USDC, is the crypto version of the actual US dollar $, value of USDC is linked to it. So if you want to buy 100 USDC, you will have to given 100 US dollars for it and the same way in selling i.e. if you sell 100 USDC then you will get 100 USD dollars back.

There are variety of Stable coins, value of which or can be linked to any stable asset i.e. USD/ INR/ EURO, other assets like Gold, Bonds etc.

Before you buy, you need to be sure that the creator of the stable coin actually has those assets in the vault from which it derives the value otherwise the coins are worthless.

They main usage of the stable coin is, you can exchange the value of the underlying assets (i.e. USD or INR or EUR or Gold or Bond) on the blockchain network in a second without any requirement or involvement of the mediators like banks and regulator like RBI/ SEC etc.

Imagine you want to send $1000 to your relative in US. One way is to go to bank, sell INR buy USD and then fill ton of documents to remit the funds. But other way is just remit the 1000 USDC from your Crypto wallet to your relative wallet and its done.

Stay tuned, for more content on Crypto and personal finance.

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