A useful currency should be a medium of exchange, a unit of account, and a store of value. Cryptocurrencies excel at the first, but as a store of value or unit of account, they’re pretty bad. You cannot be an effective store of value if your price fluctuates by 20% on a normal day.

This is where stablecoins come in. Stablecoins are price-stable cryptocurrencies, meaning the market price of a stablecoin is pegged to another stable asset, like the US dollar.

It might not be obvious why we’d want this.