The cryptocurrency Bitcoin derives its value from a variety of factors. These include decentralized acceptance, usability, demand and technological value. Its price changes with demand and usability. Gold-backed cryptocurrencies, also known as “gold-pegged”, are backed by the physical value of gold.
Similar to stablecoins, most gold-backed cryptocurrencies represent a physical collection of gold held by the issuer of the stablecoin. Risk-averse investors have also cited not investing in Bitcoin and other cryptocurrencies, or cryptos, due to their high price volatility and the lack of a central regulatory authority, such as a central bank, as is the case with fiat currencies. The concept of gold-backed cryptocurrency, that is,. These cryptocurrencies are “pegged” to an asset with a stable value, which is gold in this case, and they experience less volatility compared to Bitcoin and other altcoins.
Gold-backed cryptocurrencies are cryptocurrencies with a physical value. The value of these digital currencies is linked to the value of gold. The value of most digital currencies is “intangible” and is based on trade volume and popularity among investors. However, gold-backed cryptocurrencies have a physical and “tangible” value associated with the spot price of gold in the market.
Therefore, the parameters that cause the price of a gold-backed cryptocurrency to rise and fall are better understood. With Bitcoin and Other Altcoins, Price Fluctuations Seem Arbitrary. When the cost of gold rises or falls, the value of gold-backed cryptocurrencies follows suit. However, how do these digital currencies work? With gold-backed cryptos, coins are issued with values corresponding to the value of gold.
For example, one coin equals one gram of gold. A trusted depository, usually an independent third party, stores this gram of gold securely and can exchange it with other coin holders. The value of gold-backed cryptocurrencies will never fall below the value of gold at any given time, providing these cryptocurrencies with their relative “stability”. However, the value of these cryptocurrencies may rise above the value of gold.
This built-in stop-loss feature is what gives risk-averse digital currency investors the confidence to invest in gold-backed currencies. However, investing in gold-backed cryptocurrencies is not without risks. Physical gold accounting is not as transparent as digital currency accounting, which blockchain protects. Determining if gold exists and if storage is safe is not an easy task.
Before deciding to invest in a particular gold-backed currency, make sure that you own the gold in its entirety and that it is stored in a secure facility. Bitcoin is not a gold-backed cryptocurrency, although it has become a popular way to buy gold in recent years. As Bitcoin grew in popularity, coin traders were allowed to easily invest and trade, creating more opportunities for digital currency enthusiasts to invest in cryptocurrencies backed by gold and other altcoins. e-Gold was the first gold-backed cryptocurrency system to hit the market.
Launched in 1996, e-Gold existed 13 years before the creation of the father of all cryptocurrencies, Bitcoin. The biggest stablecoin is Tether (USDT). A Tether token is backed by a USD. The largest token by market cap is the gold token Perth Mint (PMGT) for gold-backed cryptos.
Anthem Gold, developed by Anthem Vault Inc. Gold is fully insured and safely stored with a non-bank operator. Cash Telex coins are linked to a diversified fund of gold, silver, diamonds and real estate. A Cash Telex gold coin is equivalent to one gram of gold that is securely domed.
All gold is fully insured and audited, and is publicly verifiable. This Fully Redeemable Singapore Gold-Backed Cryptocurrency Equals One Gram of Gold. This cryptocurrency is also fully secured, audited and securely domed. DigixGlobal, a Singapore-based company, provides Digix gold tokens, which have a gold equivalent value of one gram.
This gold coin is worth a fraction of a gram of gold, which makes it incredibly accessible to traders because barriers to entry are low. Investors can invest in this currency incrementally, making it an affordable long-term investment option. Tether, the Largest USD-Backed Stablecoin, Now Has a Gold-Backed Cryptocurrency Known as XAUT. Each XAUT equals one troy ounce of gold.
Gold is kept in Swiss vaults, and token holders can look up the serial numbers of their gold bars to determine ownership. Investors can also fully redeem their coins for physical gold or cash. Gold has been famous for being a stable long-term investment, especially during a recession and economic failure. Many investors also buy fiat currencies from countries with gold-backed currencies because gold-standard currencies have credible and reliable value and are considered sound investments.
With the advent of blockchain technology, digital gold currencies are now considered the new standard of global gold-backed currency. This form of currency is not linked to a single central bank or nation, but is traded and exchanged in the borderless, unregulated and anonymous world of the Internet. When considering whether to invest in a gold-backed cryptocurrency, you should consider some essential factors to ensure that your investment is profitable. Before investing in gold-backed cryptocurrencies, you need to understand why you are investing and how the investment will turn into profits for you.
Having some knowledge of the gold market and its trends is undoubtedly beneficial. Even so, you should also familiarize yourself with the finer points of investing in cryptocurrencies, the price trends of cryptocurrencies, and how the two very different markets converge. As with all investments, do your due diligence to ensure you don't lose your money. Make sure you fully own the gold that backs your cryptocurrencies and that a reputable facility stores the gold.
Gold-backed cryptocurrencies can also be referred to as gold-backed stablecoins. As such, they are similar to gold ETFs. The most prominent gold ETF, SPDR Gold Shares (GLD), is an exchange-traded fund that holds physical gold and divides its ownership into shares that can be purchased by investors. Gold-backed cryptocurrency is a type of stable cryptocurrency in which each token is backed by physical gold.
With the price of the token linked to the current price of gold, there is less price volatility compared to Bitcoin or other altcoins. It says they are a cryptocurrency, but it doesn't seem to be on any exchange (and CGC is another token). Gold-backed cryptocurrencies can be conveniently traded through blockchain networks around the world. If the latter is the case, the holder of gold-backed cryptos can exchange their gold cryptocurrency for a defined amount of the underlying gold by presenting the gold tokens to their issuer.
And only if you back up a cryptocurrency with gold, which has proven to be money over the centuries, will you gain the confidence needed to function as a proper currency, according to his argument. This fact turns gold-backed cryptocurrencies into centralized “off-chain” cryptocurrencies, since they are pegged to a counterparty. As such, a gold cryptocurrency is linked to the precious yellow metal and works as a derivative, tracking the price of gold. In fact, when cryptocurrencies like Bitcoin appeared, it was only natural for some people to propose and defend cryptos backed by gold.
Another that claims to be the world's first gold-backed cryptocurrency, Doradocoin tokens are issued to attract investment to an existing gold production company in Chile. FutureGold is a proposed crypto asset that will be backed by guaranteed royalty flows from future gold production and developed to provide funding to emerging gold mining producers through Blockchain technology. But with cryptocurrencies you can do even better and free all the coins to people, and instead of getting close to currency deflation, you literally go to currency deflation. Gold-pegged cryptocurrencies are designed similar to stablecoins, but instead of being backed by fiat money, they are backed by the value of physical gold.
Millman of Gainesville Coins also argued that gold-backed stablecoins bolstered the credibility of cryptocurrencies. The ICO produced 120 million, is now the first cryptocurrency bank to be licensed in Miami, Florida, and they are well on track to implement their person-to-person transactions. This marks an increase of about 60% over the same period last year, demonstrating that the popularity of gold-backed cryptocurrencies has been increasing. This is a guide to gold-backed cryptocurrencies that can be traded on exchanges or that can be purchased directly from the creator.