How is Stablecoin different from CBDC?

They differ in various ways.

How is Stablecoin different from CBDC?

They differ in various ways.

👉 A stablecoin is a type of CRYPTOCURRENCY designed to maintain a stable value, typically by being pegged to a reserve asset, such as a fiat currency (e.g., USD, EUR), commodities (e.g., gold), or a basket of assets.

👉 A Central Bank Digital Currency (CBDC) is a DIGITAL FORM of a country's national currency, issued and regulated by its central bank. It represents a legal, digital version of fiat money and is intended to serve as a secure and stable means of payment.

🔹 Issuer
Stablecoin - Typically issued by PRIVATE ENTITIES or organizations.
CBDC - Issued by a CENTRAL BANK or monetary authority.

🔹 Backing
Stablecoin - Often pegged to a reserve of assets.
CBDC - Directly backed by the central bank's authority and reserves.

🔹 Regulation
Stablecoin - Generally LESS REGULATED compared to CBDCs, though this is evolving.
CBDC - Highly REGULATED by central banks as they are an official form of national currency.

🔹 Issuance Process
Stablecoin - Often involves creating and redeeming stablecoins against the reserve assets.
CBDC - Often involves direct interaction with the country's financial system and legal frameworks.

💡 They both offer faster and cheaper transactions, especially for cross-border payments.

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