So my understanding is they are not us dollar they just emulate us dollars. I dont understand the technical part but for example poloniex has a usd tether as well.
when you deposit 100$ into a bank account your balance shows up as 100$ however the bank loans a portion of the money you gave them to personB for example 80$. Now personB has 80$ in their balance and you still have $100 in your account. Now there is 180$ more in circulation, the bank created $80 US dollars out of no where.
but it gets worse, personB uses his $80 loan to pay personC. PersonC then deposits this $80 into his bank... and the cycle continues over again. And that's only one way of how USD is created.
So my understanding is they are not us dollar they just emulate us dollars. I dont understand the technical part but for example poloniex has a usd tether as well.
when you deposit 100$ into a bank account your balance shows up as 100$ however the bank loans a portion of the money you gave them to personB for example 80$. Now personB has 80$ in their balance and you still have $100 in your account. Now there is 180$ more in circulation, the bank created $80 US dollars out of no where.
but it gets worse, personB uses his $80 loan to pay personC. PersonC then deposits this $80 into his bank... and the cycle continues over again. And that's only one way of how USD is created.