What are Stable coins? (animated explainer video)

What are Stable coins? (animated explainer video)

A stablecoin is a cryptocurrency whose value is tied to another asset, most often a currency like the US dollar or the euro, but other assets can be used. This type of crypto coin monitors the underlying asset, ensuring that its value remains steady over time, at least in comparison to the currency to which it is linked. In effect, it’s as if the underlying asset, such as a digital dollar, has gone electronic.

Stablecoins are frequently backed by the assets they’re linked to, as their objective is to monitor an asset. For example, when a stablecoin is issued, the issuing body usually establishes a reserve with a financial institution that maintains the underlying asset. A stablecoin, for example, may have a $100 million reserve and produce 100 million coins with a constant value of $1 each. If the owner of a stablecoin wishes to pay it out, the actual money can be retrieved from the reserve.

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Видео What are Stable coins? (animated explainer video) канала Crypto Decoded