A stablecoin is a type of cryptocurrency that is backed by a less volatile asset. A stablecoin is often linked to a fiat currency, such as the US dollar. Stablecoins may also be backed by precious metals or other cryptocurrencies. However stablecoins are implemented, the end result will be a less volatile cryptocurrency that is likely to resemble the types of currencies now in use.

Stablecoins were invented by Tether. Additionally, it is a popular digital coin used by professional cryptocurrency traders when trading crypto on exchanges since it saves them money on transaction costs by not converting US dollars for every transaction. In the short term, stablecoins promise to make it easier for consumers to purchase products with cryptocurrency - a possibility that government officials have openly acknowledged, most recently with the Biden administration's desire to more strictly regulate stablecoins.