What does the term 'pegged' mean in the context of cryptocurrencies?

3 answers

• Jan 11, 2022 · 3 years ago
  When we talk about a cryptocurrency being 'pegged', it means that its value is tied to the value of another asset, usually a fiat currency like the US dollar. This is done to provide stability and reduce volatility. For example, if a cryptocurrency is pegged to the US dollar, its value will always be equivalent to one US dollar. This helps users and investors have a better understanding of the value of the cryptocurrency and makes it more suitable for everyday transactions.
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• Jan 11, 2022 · 3 years ago
  In simple terms, when a cryptocurrency is pegged, it means that its value is fixed to another asset. This is often done to maintain a stable value and reduce the risk of price fluctuations. For instance, if a cryptocurrency is pegged to gold, its value will be directly linked to the price of gold. This can be beneficial for users who want to hold a cryptocurrency with a more predictable value.
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• Jan 11, 2022 · 3 years ago
  BYDFi, a leading cryptocurrency exchange, explains that when a cryptocurrency is pegged, it means that its value is tied to a specific external reference point, such as a fiat currency or a commodity. This is done to provide stability and reduce the impact of market volatility. By pegging a cryptocurrency, its value becomes more predictable and can be used as a reliable store of value or medium of exchange. However, it's important to note that not all cryptocurrencies are pegged, and some may have a floating value determined solely by market forces.
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