A stablecoin is a cryptocurrency that is linked to the value of a FIAT currency such as USD, EUR or YEN. This does not mean that the value is stable, but that they have the same value as these currencies. As is well known, FIAT currencies also go up and down in value in comparison with other currencies. Nothing has its own value, unless it stands in contrast to something else. Some may even be linked with multiple currencies, or against other things such as securities or gold. This is to further try to create a value that does not fluctuate too much in value.
The aim is to create a stable value in relation to the crypto world, which is often volatile. One of the attractions of cryptocurrencies is that they vary greatly in value, which makes it possible to exchange for a higher value than, for example, the stock market. Of course, this also means a much higher risk.
One method of reducing risk is to have the opportunity to, at least temporarily, save the cryptos in stablecoins. For example, if Bitcoin has risen 20% in the last month, and you think it will fall back down, then it would be both time consuming and expensive to sell your Bitcoin and withdraw the money to your bank. Instead, you can then exchange your Bitcoin for a stable currency, such as USDC or USDT.
Can you trust that a stable coin really has a real value? Some currencies such as the USDC prove that they have a backing for each currency with a real currency. They can also assure you that your money is safe as long as you keep it, and that the value can always be returned. But, for example, USDT (Tether) has no such insurance, and it has been discovered several times that they do not have backing for their entire stock of USDT. They have also admitted that a large part of their value is not in US dollars, but in other securities.
A major advantage of stablecoins over FIAT currencies is that they are located on a blockchain and thus have full transparency. You can thus see the total market capitalization, which addresses own how much, and how large the supply of new coins is. Several nations have said that they plan to officially launch a cryptocurrency as a complement to their existing FIAT currency, which will then hold the same value. Both China and the USA have made plans for a digital counterpart. However, it is unlikely that any nation will use a public blockchain as this transparency is unfortunately not desirable.
The biggest players today in terms of market capitalization are: