A stablecoin is a crypto token designed to hold a steady value, usually pegged to the US dollar. Here is how USDT and USDC work, what backs them, and the risks.
A stablecoin is a cryptocurrency designed to hold a steady value, almost always pegged to a national currency like the US dollar. One USDT or one USDC is meant to be worth about $1 at all times. They let you hold dollars on a blockchain, so you can move money or sit out market swings without cashing out to a bank.
That stability is what makes them the plumbing of crypto: most trading, sending, and saving runs through them.
The most common type is backed by reserves. The issuer holds cash and short-term government debt, and promises to redeem one token for one dollar. There are three broad designs:
The peg is only as good as the backing. An algorithmic stablecoin called UST collapsed in 2022 and wiped out billions. Stick to well-backed, regularly audited coins, and treat anything promising high yield to hold a peg as a warning sign.
USDT (Tether) is the biggest and most liquid stablecoin, accepted almost everywhere, but it has faced years of questions about how fully it is backed. USDC (Circle) is fully reserved and publishes regular attestations, so it is seen as the more transparent, regulation-friendly option. We compare them head to head in USDT vs USDC.
Relatively, but not risk-free. The real risks are reserve quality, a de-peg during panic, the issuer freezing an address, and shifting regulation. They are a useful tool, not a savings account. If you hold a large amount, move it to a wallet you control rather than leaving it idle on a platform.
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Browse coinsA cryptocurrency designed to hold a steady value, usually pegged to the US dollar so one token is worth about $1. USDT and USDC are the largest.