Hard pegs have the virtue of being simple and transparent: the supply of the coin is fixed and known. This may make them easier to deploy without jeopardizing transaction anonymity.

A downside of a hard peg is that it can be difficult to keep the peg if people desire to utilize their assets as cash rather than commodities. For example, if too many individuals purchase the currency, there will not be enough dollars on hand to back all issued Tethers.

If too many people sell their holdings for dollars, maintaining the peg would also become difficult.

Currency pegging is a practice in which countries fix the value of their currency to that of another country. Pegging generally happens where a lot of trade occurs, like in East Asia. It can also happen at the global level when a group of countries, such as the European Union, agree to peg their currencies with each other.