What makes them stable
Fiat-backed stablecoins are issued when someone deposits dollars with the issuer and redeemed when they withdraw. Reserves of cash and short-term government debt aim to keep each token worth one dollar.
Why people use them
- Holding dollar value without leaving crypto.
- Sending money internationally in minutes.
- Pausing between trades without volatility.
Risks to understand
A stablecoin is only as good as its issuer and reserves, and it can be frozen by the issuer. Spreading holdings and understanding the network you use are sensible habits.
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