What is a stablecoin and why businesses accept them

A stablecoin is a token whose price is tied to an external asset, most often the US dollar. Unlike bitcoin or ether, whose prices change by percent within a day, a stablecoin aims to stay at exactly one dollar. This makes it suitable for prices, salaries, invoices and settlements where both sides need to know what an amount is worth.

Stablecoins differ in how they hold the peg. Fiat-backed coins such as USDT and USDC are issued by a company that keeps reserves in cash and short-term securities. Crypto-collateralised coins are backed by other crypto assets locked in smart contracts with a buffer. Algorithmic designs that rely on market incentives alone have historically been the most fragile, and several have collapsed.

For merchants, the key benefit is predictability. Accepting volatile coins means either converting immediately or carrying exchange-rate risk. With a stablecoin, an invoice for 50 dollars brings in 50 dollars’ worth of tokens, and that value stays put while the funds sit on the balance or wait for a payout.

The risks are different from volatility but real: a stablecoin depends on its issuer, which can freeze tokens at specific addresses, and on the quality of its reserves. Short-term deviations from the peg (a “depeg”) have happened. A practical approach is to accept the major stablecoins, not hold large balances longer than necessary and avoid obscure tokens without a track record.

Moonvex accepts USDT and USDC on several networks. You can price goods in USD and receive stablecoins, with the rate fixed at the moment the invoice is created.

Main types of stablecoins

• fiat-backed: reserves held by an issuer (USDT, USDC)
• crypto-collateralised: backed by other tokens in smart contracts
• algorithmic: rely on supply mechanics, historically the riskiest
• commodity-backed: tied to gold or other assets