Stablecoins are a type of cryptocurrency that try to solve the volatility problem inherent to Bitcoin and other cryptocurrencies. The clue is in their name: stability is an essential characteristic of any currency that we would want to use on a daily basis.
They do this by tracking the value of a given fiat currency on a 1:1 ratio, and can be denominated in any national currency. This means that a stablecoin is only as stable as the underlying currency it represents and the mechanism used to maintain the relationship.
By far the most common denomination of stablecoin is the US Dollar. The first and still the biggest stablecoin by market cap today is Tether (USDT), launched in 2014.
Since then, a myriad other stablecoins followed suit, including stablecoins based on the Euro, British Pound, Australian Dollar, and even more volatile currencies like the Brazilian Real.
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