Ordinary crypto assets move in price minute to minute. That is workable for investing and awkward for invoicing, which is what stablecoins exist to fix: their value is pegged to something outside crypto.
How the peg is held
- Fiat-backed — the issuer holds dollars and short-term instruments and issues one token per dollar. USDT and USDC work this way, and these are the ones you meet in payments.
- Crypto-collateralised — the token is over-collateralised with other crypto assets, as DAI is.
- Algorithmic — the peg relies on supply rules alone. Several have collapsed, most publicly in 2022, and they are not used for merchant settlement.
In a payment flow
Stablecoins are what make “quote in dollars, get paid in crypto” practical. The customer can pay in BTC while the provider converts at the moment of payment and settles your balance in USDT — so the amount you were quoted is the amount you keep, minus the network fee and the provider’s commission.
They are also the usual unit for payouts: contractors and suppliers in different countries can be paid the same way, in minutes, without correspondent banking.