Which stablecoins are backed by fiat currencies and how does it affect their stability?

3 answers

• Nov 28, 2021 · 3 years ago
  Sure! Some popular stablecoins that are backed by fiat currencies include Tether (USDT), USD Coin (USDC), and Binance USD (BUSD). The backing of these stablecoins by fiat currencies provides them with stability as their value is pegged to the value of the underlying fiat currency. This means that for every stablecoin in circulation, there is an equivalent amount of fiat currency held in reserve. As a result, the stability of these stablecoins is directly linked to the stability of the fiat currency they are backed by. This backing provides users with confidence that the value of the stablecoin will remain relatively stable over time.
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• Nov 28, 2021 · 3 years ago
  Yeah, so basically, stablecoins backed by fiat currencies are designed to maintain a stable value, usually pegged to a specific fiat currency like the US dollar. The backing by fiat currencies helps to mitigate the volatility often associated with cryptocurrencies. When a stablecoin is backed by fiat, it means that for every stablecoin in circulation, there is a corresponding amount of fiat currency held in reserve. This backing provides a sense of security and stability to the stablecoin holders, as they know that the value of the stablecoin is backed by a tangible asset. It also allows for easier conversion between the stablecoin and the fiat currency it is pegged to.
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• Nov 28, 2021 · 3 years ago
  As an expert in the field, I can tell you that stablecoins backed by fiat currencies are indeed more stable compared to other types of stablecoins. This is because the value of the stablecoin is directly tied to the value of the fiat currency it is backed by. For example, if a stablecoin is pegged to the US dollar, its value will always be equivalent to one US dollar. The backing by fiat currencies provides stability and reduces the risk of price fluctuations. This makes these stablecoins a popular choice for traders and investors who want to minimize their exposure to volatility in the cryptocurrency market. At BYDFi, we also offer stablecoins backed by fiat currencies, providing our users with a reliable and stable option for their trading needs.
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