– Cryptocurrencies are a non-centralized digital means of exchange that rely upon blockchain technology – digital money.
– The market value of most cryptocurrencies fluctuates daily, and the volatility in market price can be substantial.
– In order to mitigate the challenges related to daily market volatility, and to facilitate efficient trading of a cryptocurrency, developers created a subcategory of cryptocurrency referred to as stablecoins.
– Stablecoins have their value pegged to another asset (dollars, gold, and sometimes other cryptocurrencies).
– The claim that a stablecoin such as tether is pegged to the dollar requires focused attention.
– Pegging the value of an asset to the dollar is not a new concept.
– The dollar peg of money market funds does not rest simply upon the claim of a fund sponsor but is supported by a robust regulatory system.