What is a stable coin?

So I this article, I will be talking about stable coins and what exactly they are. So no time, let's dive straight right into it.

Stable coins are coins issued to the customers in exchange for a specified currency at a certain fixed exchange rate. The specified currency can be a physical fiat (like the U.S. Dollar, Great Britain Pounds, Chinese Yen or Nigerian Naira), a cryptocurrency (like Bitcoin, Ethereum, Ripple or 1UP), or a commodity (like gold, silver, crude oil).

So we have basically established that stable coins are coins used to peg either a Fiat, a Cryptocurrency or a commodity to a fixed rate.

How do the stable coins remain stable??

Stablecoins remain stable because of the fixed exchange rate and the stability of the underlying currency. The USDT is fixed to the US Dollar, so it remains around the 1dollar radius, the same thing goes for some other stable coins like the Gemini Dollar. The Gemini dollar is also pegged to the USD, meaning you can exchange 1 Gemini dollar for 1 USD. 

Why are these stablecoins important???

Stablecoins are designed to remove the price volatility of many cryptocurrencies while maintaining the technological advantages of cryptocurrencies, such as the ease of transfer. So, they kind of curtail the volatility that makes Cryptocurrency scary and they make it predictable and just like their name stable. For instance, you are always sure that the USDT will always remain in the 1 USD radius, whether 1$ or 1.01$ but always around that perimeter. So if you buy 5,000 USDT, you are sure that your 5,000$ is safe and intact. This is the use of stable coins and why they are important.