What does the term 'pegged' mean in the context of digital currencies?

1 answers

• Burak ÇobanDec 26, 2024 · 8 months ago
  Pegging is a mechanism used in the digital currency world to maintain a stable value for a cryptocurrency. When a digital currency is pegged, it means that its value is tied to the value of another asset, such as a fiat currency or a commodity. This is done to reduce the volatility that is often associated with cryptocurrencies and provide a more reliable store of value. For example, a digital currency may be pegged to the US dollar, meaning that its value is always equivalent to a certain amount of US dollars. This helps to create stability and make the currency more suitable for use in everyday transactions and as a store of value.
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