A beginner’s guide to stablecoins
From pegs to reserves to regulation, here’s what you need to know ahead of Consensus Miami 2026.
It appears basic questions about stablecoins might actually uncover important lines of inquiry, especially as they relate to the structural risks of a nascent technology. As industries look to adopt stablecoins — sometimes even bypassing the much more battle-tested traditional financial system — it’s probably worth revisiting the answers to these basic questions.
During CoinDesk University’s School of Stablecoins, happening at Consensus 2026, May 5-7 in Miami, we’ll dig under the surface of these questions to give you a strong understanding of why stablecoins are the future and how to implement them into your business to reap benefits.
What is a stablecoin, and how is it different from Bitcoin?
Sam Broner, Founder of the Better Money Company, told CoinDesk he still gets these questions regularly. Bottom line, then: we’re still so early in this technology’s lifecycle. Whereas a stablecoin is a cryptocurrency that keeps a consistent price by being pegged to an asset, like the U.S. dollar, bitcoin’s price moves up and down depending on supply and demand.
Why can’t I just use fiat?
This is a deceptively important question. The idea behind stablecoins, and cryptocurrency broadly, is that it was built for this internet age we now live in. Money should be like the internet — global, real-time, programmable and composable. This innovates on the often clunky architecture of the traditional financial system, where decades of band-aids on an archaic core infrastructure have led to high fees, slow settlement, and inflexible services. So you can use fiat, but during our sessions, we think you’ll be persuaded that stablecoins are the future.
What keeps a stablecoin’s price at $1?
Just like fiat (and crypto), there are different types of stablecoins.
Some keep their peg by having the same amount of collateral in dollars (or euros or whatever fiat they choose) in their coffers. This mechanism design is called fiat collateralized, and it’s how stablecoins like USDC work — they’re backed 100% by cash or cash equivalent assets and are actually redeemable 1:1 with those.
Other stablecoins have what is known as overcollateralization, like DAI. MakerDAO’s stablecoin DAI is backed by overcollateralized loans: it keeps its dollar peg by locking other assets in contracts as collateral for DAI creation.
The last, and slightly controversial, type of stablecoins rely on algorithmic stabilization — that is, computer algorithms are built to manage the supply and demand so that a coin stays pegged to $1. While this is certainly an interesting tech that will continue to be innovated upon, it’s also led to huge failures, subsequently wiping out millions of dollars from the ecosystem.
