What is a stablecoin?

Stablecoins are cryptocurrencies that are believed to have more price stability than other cryptocurrencies, because their value is pegged to a currency or commodity or financial instrument. They have become extremely popular over the last few years. Market capitalisation of stablecoins from the largest  issuers exceeded $127 billion as of October 2021, which was an increase of 500% year-on-year, as per US government data. BitUSD was the first stablecoin issued, in 2014. Investors have to remember that, while stablecoins are backed by an underlying asset, they lose value if the issuing company goes bankrupt.