Definition ∞ An asset-backed digital currency is a digital token whose value is directly supported by real-world or other digital assets held in reserve. This structure provides a tangible store of value, aiming to reduce price volatility often seen in unbacked cryptocurrencies. The backing assets, such as fiat currency, commodities, or other digital tokens, are typically held by a custodian. This arrangement seeks to offer stability and trust through verifiable reserves.
Context ∞ The reliability of asset-backed digital currencies depends heavily on transparent auditing and secure reserve management. News frequently reports on the attestations of these reserves, highlighting the importance of full backing to maintain market confidence. Debates persist regarding the regulatory classification and oversight necessary for these digital assets to achieve widespread acceptance.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
