The first stablecoin seems to have been BitShares\u2019 BitUSD in 2014 \u2014 which was freely traded, but tried to use fancy algorithmic trading tricks to keep the market price steady at $1, rather than being backed by anything. The mathematical peg failed about five days after launch.2<\/sup><\/a><\/p>\n Tether was founded as \u201cRealCoin\u201d in July 2014. Tether was (supposedly) backed one-to-one by US dollars on account \u2014 the tethers were just representations of dollars (this is called e-money<\/i>, though Tether doesn\u2019t use the term), and buyers were told they could redeem them for dollars any time. They were traded freely, but the price stayed very close to one dollar.<\/p>\n Tether went on to become hugely popular in crypto trading markets \u2014 because tethers kept a stable value, but moved around the world at the speed of crypto. Much faster than moving actual money around \u2014 hampered as it was by all those tedious regulations. For a while, Tether openly touted evading regulation as its advantage.3<\/sup><\/a><\/p>\n In the 2017 Bitcoin bubble, people started questioning Tether\u2019s backing \u2014 Tether didn\u2019t seem to have a steady bank account, redemptions seemed not to actually be possible, regulators seemed absent, and tethers seemed to be issued whenever the price of Bitcoin needed a bit of a pump.4<\/sup><\/a><\/p>\n By 2019, Tether admitted that tethers weren\u2019t fully backed by dollars, and some of the backing was loans, or maybe bitcoins \u2014 though there wasn\u2019t evidence of this either.<\/p>\n So other stablecoin initiatives started \u2014 more regulated versions, with audits, whose marketing point was pretty much \u201cwe\u2019re not Tether.\u201d These were mostly intended for the crypto trading market \u2014 not as money for consumers.<\/p>\n Libra the currency is not quite as stable as these currency-pegged coins \u2014 it\u2019s backed by a basket of multiple currencies, which can go up and down. But the term \u201cstablecoin\u201d now seems to include basket-backed coins of this sort.<\/p>\n When a crypto trader says \u201cstablecoin,\u201d they mean something like Tether \u2014 but when a central bank says \u201cstablecoin,\u201d it\u2019s always a euphemism for Libra.<\/p>\n Libra is also the first stablecoin aimed squarely at the everyday consumer.<\/p>\n <\/p>\n *<\/a> There was a cryptocurrency released in 2013 called \u201cStableCoin,\u201d though it wasn\u2019t a stablecoin \u2014 see \u201c[ANN][SBC] StableCoin \u00a6\u00a6 A new breed of cryptocurrency \u00a6\u00a6 v1.2 RELEASED\u201d<\/a> BitcoinTalk Bitcoin Forum > Alternate cryptocurrencies > Altcoin Discussion, 7 June 2013.<\/p>\n<\/div>\n 1<\/a> Tim Swanson. \u201cWhat Dogecoin Must Do to Survive.\u201d<\/a> CoinDesk, 25 May 2014.<\/p>\n<\/div>\n 2<\/a> Preston Byrne. \u201c<\/a>Well I\u2019ll be damned: BTSX BitAsset market failure after only 5 <\/a>days.\u201d<\/a> Blog post, 28 August 2014.<\/p>\n<\/div>\n 3<\/a> \u201cFrequently Asked Questions.\u201d Tether, archive<\/a> of 20 March 2015. \u201cYou can fund your account with bitcoins and convert to Tethers to stabilize your bitcoins and without having to undertake KYC.\u201d<\/p>\n<\/div>\n
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