how are you all hope all are well, Today we will know the difference between Real Coin and Stable Coin, When we were kids, we used to think that by printing lots of money on paper, we could become very rich. But the reality is completely different. Let's take an example in 1920 during the First World War to deal with the bad times, the German government printed money at will, the result was horrible in January 1923 to buy a loaf of bread, where it cost 250 German tala, it went to 200 billion taka in November, unbelievable but that's it. True, because creating real currency also requires backup, There is a lot of similarity between real money and Stable Coins, Stable Coins are of 4 types- 1. Fiat backed Stable Coin 2. Crypto Backed Stable Coin 3. Commodity-Backed Stablecoins 4. Algorithmic Stablecoins
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,
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