Stablecoins are private digital representations of fiat currency. They are pegged at 1:1 to USD or other fiat currencies, and are backed by cash or short-term government securities. Yes, some are backed by opaque reserves, which should be avoided.
Cryptocurrencies (like Bitcoin and Ethereum) are digital-native assets on public blockchains. There is no issuer, no sovereign backing. Their value is determined entirely by scarcity, network belief and speculative demand. They overcome fears of censorship, a lack of trust in institutions and governments, currency debasement and asset confiscation.
Cryptocurrencies meet the above objectives as they are hard to censor. They are global assets that trade without the permission of any authority and there is no counterparty risk when held on a self-custodial basis. Their weaknesses include extremely volatility, the absence of a real “price anchor”, poor performance as a unit of account and limited real-economy usage.
