With the passing of the Stablecoin Act and recent commentary from Custodia Bank CEO Caitlin Long on CNBC, the digital asset space is once again in the spotlight. But many people are still confused about the difference between Bitcoin and stablecoins. Let’s clarify.
Bitcoin
Bitcoin is a decentralized digital asset. Often referred to as digital gold, it is scarce, censorship-resistant, and not controlled by any government or corporation.
- Fixed supply: only 21 million will ever exist
- Volatile: price fluctuates based on market demand
- Purpose: long-term store of value, hedge against inflation, and financial independence
Stablecoins
Stablecoins are digital tokens pegged to fiat currencies like the US Dollar. They are issued by centralized institutions and designed to maintain price stability.
- Pegged value: 1 stablecoin is typically equal to 1 USD
- Issued by: banks or private companies
- Purpose: trading, remittances, payments, and access to DeFi applications