**A Stable coin** is a cryptocurrency. It is pegged to a stable asset, fiat currency such as a U.S dollar but also can have value linked to other cryptocurrencies. It is fixed and free from the effect of fluctuations as long as the pegging is maintained. They are the answer to the highly volatile crypto market, since they are designed to maintain a stable value.
**stable coins are categorized into three.**
**Fiat collateralized** stable coins which use a specific amount of a standard fiat currency as collateral to issue crypto coins. Other collaterals include gold, silver and oil. This method is simple and operate a stable cryptocurrency though it requires a custodian to hold fiat currency and guarantee the issuance as well the redemption of stable coin tokens.
**Crypto collateralized** stable coins. Underlying collateral is another cryptocurrency. To accommodate the adverse impact of the collateral cryptocurrency’s volatility, a higher cryptocurrency is used to issue lesser valued stable coins.
**Non collateralized** stable coins. They are not backed by any collateral but operate in such a way that they expected to retain a stable value.
Stable coins offer the best medium in using cryptocurrencies in everyday transactions. They can be applied in trading goods and services over block chain networks, decentralized insurance solutions, consumer loans and prediction markets.
Stable coins are dependable assets and relatively safe.
It is easier to move funds around.
Eliminate price volatility.
In the third world countries especially Africa, cryptocurrencies are a necessity and they are increasingly gaining popularity. Notably in countries such as Kenya, Nigeria and South Africa. This adoption will transform lives where the population is unable to access banking services. For instance, [Microloan coin]( comes in handy for a situation like this thus as a digital block chain currency, financial assets are the invested in form of funds or loans to small sized enterprises to specific developing countries.
Africans embracing the cryptocurrencies is due to the financial melt downs. Kenya is experiencing widespread crypto adoption and transactional usage of digital currencies like Mpesa and bitcoin.
Stable coins are important for the development of a cryptocurrency economy mostly in developing countries.