The difference between stablecoins and other digital assets - The Complete Guide to Stablecoins

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In this section, we will cover the difference between a stablecoin and other digital assets like bitcoins, fiat currency, fungible tokens, Central Bank Digital Currency (CBDCs), and Altcoins.

Stablecoin vs Bitcoins

A stablecoin is a token that has a non-volatile price and Bitcoin is a cryptocurrency whose price is volatile in nature. Stablecoins are used to minimize the price volatility of cryptocurrencies like Bitcoins.

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Stablecoin vs Altcoin

Altcoins are cryptocurrencies other than Bitcoin. Similar comparisons apply, with regards to volatility.

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Stablecoin vs Fiat

Stablecoins are issued by crypto companies that are backed by traditional financial investment tools. They can be pegged to any fiat currency, foreign exchange-traded commodities, precious or industrial metals.

While fiat currencies are issued by central banks, they are not asset-backed. Their value depends on the central bank. The central bank can regulate the total supply in circulation by printing and withdrawing them from use.

Stablecoin vs Fungible Tokens

A stablecoin is a type of fungible token whose value is fixed to another asset, often currencies such as the US dollar or the Euro, and other assets.

Read: Cryptocurrency vs Token or watch the explainer video below:

Stablecoin vs CBDCs

A stablecoin may or may not be regulated, while Central Bank Digital Currency (CBDC) is completely regulated by the monetary authorities of a nation. This means stablecoins are decentralized while CBDCs are centralized. Furthermore, CBDCs may be implemented with fungible tokens, in a manner similar to stablecoins, or they may be implemented using other technologies, including centralised ones.

Stablecoin vs CBDCs

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Be sure to check out our next article in this guide, about Stablecoins on Bitcoin - The Complete Guide to Stablecoins


If you would like to delve deeper, here are some resources and tools that we recommend.

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