Think of it like casino chips for crypto. If you want to buy lesser known cryptocurrency, no one is trading directly for dollars, the trades are happening from one crypto to another. You spend your actual cash to buy in, then you can cash out when you are done. But if you are trading all the time, looking for opportunities, you don't want to just leave everything parked on some random cryptocurrency, because it's highly volatile. Stable coins are like the casino chips because they hold a relatively stable value, so you have your money in those and it's ready to trade whenever the need arises.

Stable coins can hold a stable value because they are usually backed by some actual assets like money and securities and stuff.

[–] mustard57@lemmy.world 5 points 3 days ago (2 children)

So their utility is that they are a form of USD that can easily interact with cryto markets.

[–] squaresinger@lemmy.world 7 points 3 days ago (1 children)

Except that you have some anonymous strangers who pinky swear that they have said real-wolrd-asset backing.

There've been more than enough instances where said backing just didn't exist.

[–] schnurrito@discuss.tchncs.de 4 points 3 days ago

isn't that how economic crises start or something.......?

[–] Zarxrax@lemmy.world 3 points 3 days ago

Basically, yeah