this post was submitted on 12 Aug 2025
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Explain Like I'm Five
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It can mean a lot of things, but mostly, USDT/USDC are the two most used ones and are what we would normally call stable coins.
It's simple: $1 per 1 USDT/USDC. A company pinky swears that it will pay you the money when coins are presented to them. So basically they are printing money with their credit.
It has its value, though. It is certainly easier than any other means of transferring money overseas and is actively used.
I guess I should have asked a better question. What I really want to know is how are stablecoins better than just plain ol' bitcoin? And what happens when the asset(Bitcoin?) behind the stablecoin moves up or down? How do they keep the value at $1 USD?
Stablecoins are not better, they’re different.
If you’re on a trading platform, you have a cash account. You use the cash account to buy stocks, options, etc. When you sell these, they credit your cash account. You only actually get the money if you cash out your account, which most people who are actively trading don’t because it takes time to transfer out.
Stablecoins are like cash accounts for crypto. You can use them to buy and sell coins like Bitcoin or Ethereum. Then you can eventually cash them out, which takes more time.