Difference with Real Money VS Stable Coin!
Assalamu Alaikum
If the government of a country wants to create money, then in exchange for that money, 1:1 Ratio USD, Gold, Silver etc. should be backed up with valuable assets.
The World Bank is allowed to create money by showing the Backup Fund, if it wants to print 10M rupees, then 10M valuable assets or foreign currency must be kept as a backup.
Among Stable Coins, Fiat backed Stable Coin, Commodity-backed Stablecoins, these two categories are similar.
Fiat backed stable coins act as backups to foreign currencies such as USD, GBP, Euro,
And gold, silver, oil, gas, such valuable resources work as backups for commodity-backed stablecoins.
A popular commodity-backed stablecoin is PAXG,
Also, the stable coin of the remaining 2 categories follow different rules, Crypto Backed Stable Coin keeps Crypto as backup, and Algorithmic Stablecoins do not follow any rules, so the coins of this category have a chance to crash at any time.
I hope everyone understands, I am ending today here, everyone be well and stay healthy, Allah Hafez,
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You are quite correct, sometimes due to lack of backing it means fiat currency may experience high inflation due to the way it's been excessively printed just like in Germany case in the first world war, stable coin on the other hand won't experience that as it backed by an underlying asset. Thanks for sharing.
Thank you very much for being there
Thank you very much for reading my post and leaving a nice comment
This is our thinking and recommend of economist but this is not truely happening in this modern world since 1971 after Nixon's Shock. You can google the term Nixon Shock to get the depth of modern money printing system. And surely it will shock you as well.
Modern central banks need only paper, ink, printing machine and will to print money nothing else. Backup of gold or foreign currency is only a concept. Almost no central bank in the World is maintaining it. That's the reality. The more a central bank print the more its users lose their money every year in the form of inflation.
I agree with you, I know the United States of America currency USD or inflation spread all over the world,
Hello brother, I hope you're alsobdoing well. Today's discussion on the disparity between Real Coin and Stable Coin is enlightening. Drawing parallels to historical events, like the German hyperinflation of the 1920s, highlights the importance of backing currency with tangible assets. Understanding the nuances between Fiat backed Stable Coins, Crypto Backed Stable Coins, Commodity-Backed Stablecoins, and Algorithmic Stablecoins provides insight into the diverse landscape of stable digital assets.
A nice discussion about the difference between real money and stable coin. By reading your post I got to know the difference between real money and stable coin. Thanks for sharing such a helpful post.