Fiat-backed tokens are designed to combine the benefits of cryptocurrencies with the stability of fiat currencies. They are often issued by companies that hold reserves in traditional currency to support the value of the tokens they create. For instance, for every fiat-backed token issued, the issuing entity will typically hold an equal amount of fiat currency as collateral. This design aims to minimize volatility while still providing the benefits of blockchain technology such as transparency and faster transactions. Users can trade, send, and receive these tokens on various blockchain platforms and exchanges, making them a popular choice for both consumers and businesses looking to navigate the cryptocurrency landscape without the inherent volatility of traditional cryptocurrencies.