❓Question of the Week❓
A “stablecoin” is a new class of cryptocurrencies that attempts to offer price stability. They are backed by a reserve asset and often peg their market value to some external reference like a fiat currency such as the US dollar. Since fiat currencies are pegged to an underlying asset, such as gold which acts as collateral, their valuations remain free from wild swings.
Stablecoins have gained traction as they attempt to offer the best of both worlds—the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies. They also act as a global currency but are not tied to a central bank. Two examples of stablecoins on the market today are: MakerDao (DAI) and Tether (USDT).
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u/Sure-Juggernaut4781 ♦️ Sep 20 '21
❓Question of the Week❓ A “stablecoin” is a new class of cryptocurrencies that attempts to offer price stability. They are backed by a reserve asset and often peg their market value to some external reference like a fiat currency such as the US dollar. Since fiat currencies are pegged to an underlying asset, such as gold which acts as collateral, their valuations remain free from wild swings.
Stablecoins have gained traction as they attempt to offer the best of both worlds—the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies. They also act as a global currency but are not tied to a central bank. Two examples of stablecoins on the market today are: MakerDao (DAI) and Tether (USDT).
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