What are the benefits and risks of using pegging in the cryptocurrency industry?

1 answers

• SravanJun 17, 2021 · 5 years ago
  Pegging in the cryptocurrency industry can be beneficial for various reasons. Firstly, it can provide stability to the value of cryptocurrencies, making them more reliable for everyday transactions. This can help increase their adoption and usage. Secondly, pegging can also help reduce the risk of price manipulation in the cryptocurrency market. By tying the value of a cryptocurrency to an external asset, it becomes less susceptible to market manipulation. However, there are also risks associated with pegging. If the pegged asset loses its value, it can negatively impact the value of the cryptocurrency. Additionally, pegging can also introduce centralization risks, as the control over the pegged asset lies with a centralized authority. Overall, pegging can offer stability but comes with its own set of risks.
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