Comprehensive overview of STABLECOINS — PART 2
FIAT COLLATERALIZED STABLECOINS
**Fiat collateral for creating a token represents reserves held by a central entity.**
How it works: The mechanics for implementation are fairly straight-forward. A third party takes deposits in US Dollars (or another desirable fiat currency) and issues a unit of stablecoin for every dollar deposited. To cash out a unit of stablecoin, the third party wires US Dollar to the holder and burns a unit of the stablecoin.
Pros:
* Easy to conceptualize
* Value will match USD with certainty if properly implemented (digitized dollars without capital controls)
Cons:
* Must trust third-party to hold fiat collateral
* Need additional third-party for audit to make sure appropriate collateral is being held and units of stablecoin match deposits
* Expensive and slow to audit
Projects with this structure:
1.Tether,
2.TrueUSD,
3.DigixDAO,
4.Globcoin,
5.AAA reserve,
6.Stably,
7.X8 currency
Read the full article at - https://medium.com/cp-processor/comprehensive-overview-of-stablecoins-part-2-7ebf0c36eb32