Stablecoins are arguably the biggest innovation in global payments since the invention of card networks. And they’re doing something nothing in crypto has truly solved until now: addressing the problem of volatility.
Almost every major cryptocurrency—from Bitcoin to Ethereum—fluctuates wildly in price. That makes budgeting in crypto nearly impossible, and it’s a major reason businesses hesitate to accept digital assets as payment. But the blockchain technology powering crypto networks is fast, efficient, and incredibly secure.
This is where stablecoins step in. They allow us to use the blockchain’s speed and transparency without the price swings that plague typical cryptocurrencies.
In this guide, we’ll break down what stablecoins are, how they work, why trillions of dollars move across stablecoin networks every year, and how you can buy, send, and receive them yourself.
Keep on reading, or check out my video below to learn more!
A stablecoin is a type of digital token whose value is tied to a real-world asset—most commonly a fiat currency like the U.S. Dollar or Euro.
Fiat-backed stablecoins such as USDT (Tether), USDC (Circle), PYUSD (PayPal) and EURC maintain reserves that are designed to match all outstanding tokens.
In other words: For every 1 stablecoin in circulation, there should be 1 real dollar (or euro) held in reserve.
These fiat-backed stablecoins are the most popular and the most widely used. But for educational purposes, let’s briefly touch on a different type: algorithmic stablecoins.
Algorithmic stablecoins attempt to stay at $1 through software mechanisms, supply adjustments, and market incentives—not through actual cash reserves.
And as you might imagine, this introduces a huge weakness: the peg only works as long as people believe it will work.
The most infamous example is TerraUSD (UST). It tried to maintain its $1 price using a second token called LUNA, rather than holding real assets. When confidence began to fade in 2022, withdrawals skyrocketed. The algorithmic mechanism couldn’t keep up, the peg broke, and UST collapsed.
The key takeaway: Algorithmic stablecoins without real-world reserves are fragile and have historically failed under pressure.
Going forward, this article will only cover fiat-backed stablecoins, which remain the most reliable version.
Now that we know what they are, let’s look at why stablecoins matter—and why they’re being used at massive scale.
Even though stablecoins don’t appreciate in value the way Bitcoin or Ethereum might, they play a crucial role in the global payment ecosystem.
In fact, in just the first half of 2025, on-chain stablecoin transaction volume reached $8.9 trillion.
So why are stablecoins moving trillions?
Sending money internationally through the traditional banking system is notoriously slow and expensive.
Transfers can take 3–5 business days, and fees often reach 5–6% of the total amount.
Stablecoins eliminate all of this.
Speed: Transfers typically settle within minutes.
Availability: Payments work 24/7/365.
Cost: Network fees (or “gas fees”) are often under $1.
No middlemen: The payment goes directly from sender to recipient—peer to peer.
Stablecoins operate on public blockchains. This means the ledger is:
transparent
tamper-resistant
highly secure
While users still need to protect their wallets (just like guarding a bank login), the blockchain itself is nearly impossible to manipulate fraudulently.
Stablecoins aren’t just helpful for payments. In many parts of the world, they function as a store of value. Countries like Turkey, Argentina, and Nigeria experience rapid inflation and unstable local currencies.
With access to dollar-pegged stablecoins like USDC, individuals can:
protect their savings
avoid rapid devaluation
hold digital dollars without needing a U.S. bank account
For many, this is the first time they’ve been able to save money reliably.
Stablecoins may be the bridge between traditional finance and the decentralized future. They bring together the stability of government-backed currencies with the speed, security, and efficiency of blockchain networks.
As global payment rails continue to evolve, stablecoins could become the foundation of a more connected, faster, and more inclusive financial system.
