What is a stablecoin? USDT and USDC explained
Lost crypto prices go up and down sharply. A stablecoin tries to stay at one fixed value, most often one US dollar.
Examples
USDT (Tether) and USDC (USD Coin) are two of the biggest. Each token is meant to be worth about $1.
How they keep the price steady
The company behind the coin says it holds assets, such as cash and short-term government bonds, to back the tokens. In theory you can swap one token for one dollar.
Why people use them
- To move money between exchanges quickly.
- To park money in crypto without selling into rupees.
- To trade other coins, since many coins are priced in stablecoins.
Risks
- The company may not hold enough backing, or may not give you the money when you ask.
- A stablecoin can lose its peg and trade below $1 for a time.
- Rules vary by country and can change.
India
In India, selling crypto, including stablecoins, is taxed like other crypto: 30% on gains and 1% TDS on transfers.
What to check
Look at who issues the coin, whether the reserves are reported by an independent auditor, and how easily you can exchange it.
This article is for information and is not investment advice.