What is a Stablecoin? Difference between Stablecoins & Digital Assets

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.

Stablecoins	Bitcoins
Regulated	Non-regulated
Non-volatile	Volatile
Used as an alternative to fiat currencies	Used for trading on exchanges
Means of payment	Means of payment

Stablecoin vs Altcoin

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

Stablecoins	Altcoins
A token built on a blockchain network backed by fiat and cryptocurrency	Any cryptocurrency other than bitcoin are known as altcoin
Token	Cryptocurrency
Stable	Volatile
Fiat-collateralized, crypto-collateralized, commodity-collateralized, non-collateralized	Rootstock, Ethereum

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.

Stablecoins	CBDC
Decentralized	Centralized
Used as an alternative to fiat currencies	Used as a means of payment like the country's fiat currency
Cryptocurrency	Cryptocurrency
Uses private money	CBDCs use private money but guarded by reserve assets of the country

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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