Gold-backed vs USD-backed stablecoins: Key differences

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Coin Telegraph 16h ago

Gold-backed vs USD-backed stablecoins: Key differences - Coin Telegraph

Quick Summary:

To that end, stablecoin issuer Tether introduced Alloy (aUSDT) in June 2024, a gold-backed digital asset tied to Tether Gold (XAUT), a token representing claims on physical gold. Gold-backed stablecoins resemble the gold-backed US dollar before 1971.

This comparison explores the fundamental differences, focusing on their backing assets, price stability, liquidity, adoption and primary use cases:Backing asset: Physical gold vs fiat reservesGold-backed and USD-backed stablecoins differ primarily regarding the collateral that supports their value.

By combining the reliability of fiat currency with the efficiency of blockchain, USD-backed stablecoins play a vital role in digital finance. Here are a few advantages of USD-backed stablecoins:Steady value: Unlike traditional cryptocurrencies, which experience high volatility, stablecoins maintain a steady value, making them an ideal unit for payments, particularly in exchange for goods and services.