SejongWisdom
Sat Jul 13 2024
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7 answers
1056
What is a crypto backed stablecoin?
Inquiring minds often wonder, "What is a crypto-backed stablecoin?" At its core, a crypto-backed stablecoin represents a digital asset whose value is pegged to a traditional asset or a basket of assets, often cryptocurrencies themselves. These coins aim to provide stability in an otherwise volatile cryptocurrency market by minimizing the effects of price fluctuations. They are backed by a reserve of assets, usually cryptocurrencies like Bitcoin or Ethereum, held in a trust or custodial wallet. The reserve serves as collateral, ensuring the stability of the coin's price. Crypto-backed stablecoins enable faster and cheaper transactions while offering the stability and security investors desire.
