Representations of cryptocurrencies including Bitcoin, Dash, Ethereum, Ripple and Litecoin are seen in this illustration picture taken June 2, 2021. REUTERS/Florence Lo/Illustration
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LONDON, May 12 (Reuters) – Most cryptocurrencies have a major problem with price volatility, but one sub-category of coins is designed to maintain a constant value: stablecoins.
As cryptocurrency prices plummeted this week, with bitcoin losing around a third of its value in just eight days, stablecoins were supposed to be isolated from the chaos.
But an unexpected collapse in the fourth-largest stablecoin TerraUSD, which broke from its 1:1 dollar peg, has brought the asset class under renewed attention. read more
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Here’s what you need to know:
WHAT ARE STABLECOINS?
Stablecoins are cryptocurrencies designed to be protected from the wild volatility that makes it difficult to use digital assets for payments or as a store of value.
They attempt to maintain a constant exchange rate with fiat currencies, for example through a 1:1 U.S. dollar peg.
HOW IMPORTANT ARE THEY?
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