A stablecoin is a type of digital token designed to maintain a stable value based on an underlying pegged asset.

These assets can include fiat currency, precious metals, commodities, or a combination of these (e.g. a basket of fiat currencies).

The purpose of a stablecoin, like USDt or USDC, is to provide a relatively stable digital store of value compared to the volatility experienced by not only other cryptocurrencies but other fiat currencies like the Naira ( Nigeria’s fiat currency)

A stablecoin acts as a bridge between traditional assets and Bitcoin, enabling users to transact with greater confidence and predictability.

To maintain its correlation stablecoins could be fiat-backed, commodity-backed or algorithmic.

USDt or USDC is a fiat-backed stablecoin.