What Stablecoins Are and Why They Exist

Stablecoins are digital assets designed to hold a relatively stable value, usually by linking their price to a reference asset such as a U.S. dollar. In this lesson, Professor Mark Davis explains what stablecoins are, how they differ from other cryptocurrencies, and why they emerged as a practical answer to volatility, slow settlement, and friction in digital payments.

You will learn the basic categories of stablecoins, the core problem they try to solve, and the reasons businesses, traders, and consumers use them today. This lesson sets the foundation for later topics on design, risks, regulation, and real-world applications.