# Understanding Stablecoins: How They Operate and Their Impact
Stablecoins are cryptocurrencies designed to maintain stable value by anchoring to reserve assets like fiat currencies, commodities, or algorithms—eliminating the volatility of Bitcoin and Ethereum. This comprehensive guide explores the four primary stablecoin types (fiat-backed, commodity-backed, crypto-backed, and algorithmic), their mechanisms for maintaining price stability, and real-world applications across trading, international remittances, DeFi protocols, and high-inflation regions. Whether you're a beginner seeking cryptocurrency fundamentals or an investor evaluating stablecoin risks and regulatory landscapes, this article provides essential insights into the $235 billion stablecoin market, major players like USDT and USDC, regulatory frameworks, and practical uses that bridge blockchain technology with traditional finance.