Are gold-backed stablecoins a good investment?

Using gold-backed stablecoins, an individual can hedge against inflation and rest easy knowing they truly own physical gold. While many stablecoin prices are pegged to riskier assets, gold-backed stablecoins rely on the timeless value of one of the world's most precious metals.

What is a stablecoin backed by?

The most popular stablecoins are backed 1:1 by fiat currency. Because the underlying collateral isn’t another cryptocurrency, this type of stablecoin is considered an off-chain asset. Fiat collateral remains in reserve with a central issuer or financial institution, and must remain proportionate to the number of stablecoin tokens in circulation.

Are algorithmic Stablecoins backed by any asset?

Algorithmic stablecoins aren't backed by any asset — perhaps making them the stablecoin that is hardest to understand. These stablecoins use a computer algorithm to keep the coin’s value from fluctuating too much.

Is USDC a centralized stablecoin?

These are centralized stablecoins, which means the stablecoin is held by an entity or exchange. In the case of USDC, this stablecoin is managed by Circle and Coinbase. One of the risks with stablecoins that have a central authority is trusting that they can maintain their supply of dollars equal to the supply of stablecoins.