Pegged Currency

A cryptocurrency whose price is attached to a real-life asset or reference.

A pegged currency is any cryptocurrency whose price value is determined by an external asset. Also called a stablecoin, the market value of these virtual currencies is always ‘pegged’ to something external to it, either to a fiat currency like the US dollar or a commodity like oil. As a result, pegged currencies are generally less volatile and therefore reliable compared to other types of virtual currencies.

There are 3 major types of pegged currencies: the ones with price values pegged to fiat currencies, the ones with price values pegged to other cryptos, and the ones with price values determined by supply-stabilizing algorithms. Examples of pegged currencies include USD Coin (USDC), Tether (USDT), Binance USD (BUSD), and Dai (DAI).