What Is a Fiat-Pegged Cryptocurrency?
A fiat-pegged cryptocurrency is a type of digital currency that is pegged to the value of a traditional, government-backed currency. This means that its value will remain stable and consistent with the underlying fiat currency it is tied to. For example, if you own one unit of a USD-pegged cryptocurrency such as Tether (USDT), then your asset’s worth should always be equal to 1 US dollar.
Fiat-pegged cryptocurrencies are becoming increasingly popular among investors who want exposure to crypto markets without having to worry about price volatility or market fluctuations. They also provide an easy way for people in countries with unstable currencies or limited access to banking services, such as Venezuela, Zimbabwe and Argentina, to store their wealth securely outside of their local economy. Fiat-pegged tokens can also be used by businesses looking for more efficient ways of making international payments than using traditional methods like wire transfers or credit cards.