> For the complete documentation index, see [llms.txt](https://docs.leather.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.leather.io/learn/bitcoin-stablecoins.md).

# Bitcoin Stablecoins: What They Are and How They Work

A stablecoin tracks the price of a currency such as the US dollar. The kinds of stablecoins and how they relate to Bitcoin.

A stablecoin is a crypto token whose price tracks a stable asset, usually the US dollar. A Bitcoin stablecoin runs on Bitcoin or a Bitcoin layer, or uses bitcoin as its collateral.

Most stablecoins hold their price because holders can redeem them for the underlying asset, and the market trusts that redemption works.

## Kinds of stablecoins

* **Fiat-backed:** backed by bank deposits and government debt held by the issuer, such as USDC and USDT.
* **Crypto-backed:** backed by crypto collateral worth more than the stablecoins issued, locked in smart contracts.
* **Commodity-backed:** backed by an asset such as gold.
* **Algorithmic:** no collateral; contracts adjust supply to hold the price. Several have lost their peg.

## Bitcoin-secured and bitcoin-backed

* A **bitcoin-secured** stablecoin runs on a Bitcoin layer and relies on it for security, but its collateral can be anything.
* A **bitcoin-backed** stablecoin uses bitcoin as collateral, wherever it runs.

The first stablecoin, USDT, launched on Bitcoin in 2014 through the Omni Layer protocol.

## Stablecoins in Leather

A stablecoin works in a wallet that supports its network. Leather holds stablecoins issued as tokens on Stacks. The Tokens list on the Home screen always shows USDCx, a USDC token on Stacks; with a zero balance, its "Bridge" button opens the Stacks bridge in a new tab.