Gold-Backed Cryptocurrency Market

What is Cryptocurrency?

  • A  crypto-currency, or crypto is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.
  • It typically does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems.
  • When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a block chain, that serves as a public financial transaction database.

Gold Backed Cryptocurrency

  • A gold-backed cryptocurrency is a derivative digital asset whose value is supposedly underwritten by the equivalent price in gold. A coin or token issued that represents a value of gold; for example, one physical gram of gold equals one coin.
  • Each gold-backed cryptocurrency defines a single one of its tokens arbitrarily as having an equivalent worth of certain grams or troy ounces of gold, meaning that this equivalent should be present in the reserves/vaults of the company or a trusted custodian as physical collateralized assets.
  • Some gold-backed tokens even allow for the redemption of the tokens back for gold.
  • The last few years have seen the creation of block-chain projects that claim to have tokens backed by physical gold.
  • There’s a bunch of block-chain networks that claim to leverage physical gold to back certain tokens. For instance, Digixglobal has a token called DGX, which represents 1 gram of 99% LMBA standard gold, Tether Gold (XAUT) token represents one troy fine ounce of gold.
  • While 30 Gold-Backed Crypto attempts have failed, 77 existing block chain projects attempt to leverage the precious metal’s backing.

Issues with Gold Backed Cryptocurrency

  • Gold-backed cryptocurrencies have, however, historically struggled with systemic issues, such as:
    • low liquidity (as they aren’t generally traded across many exchanges);
    • ascertaining the proof of reserves (determining whether the company has the claimed reserves and gold backing or not);
    • a dependence on central parties for collateral safekeeping and auditing, which practically defeats their purpose as “cryptocurrencies,” as one of the necessary properties of cryptocurrencies is decentralization.

Top Traded Gold Backed Cryptocurrency

Sr. No. Name Sym Price Market Cap Volume ($) Circulating Supply
1 Bitcoin Gold BTG $33.48 $583,319,733 $108,220,860 17,513,924 BTG
2 PAX Gold PAXG $1,730.40 $104,325,626 $10,500,218 60,161 PAXG
3 The Midas Touch Gold TMTG $0.007323 $58,337,059 $4,160,848 7,783,148,456 TMTG
4 Mirrored iShares Gold Trust mIAU $16.65 $24,455,717 $31,925 1,440,433 mIAU
5 IG Gold IGG $0.001181 $10,661,392 $31,044 8,856,541,707 IGG
6 Digix Gold Token DGX $55.25 $4,231,013 $848,702 76,633 DGX
7 Golden Goose GOLD $0.01779 $2,958,816 $240,770 165,994,209 GOLD
8 CACHE Gold CGT $55.64 $2,608,528 $136,033 46,860 CGT
9 Perth Mint Gold Token PMGT $1,733.99 $1,500,660 $11,232 865 PMGT
10 Golden Pyrex GPYX $0.1579 $800,515 $52,049 9,999,999 GPYX
11 Digital Gold GOLD $53.22 $724,753 $347,229 13,530 GOLD
12 Ethereum Gold ETG $0.0186 $375,609 $3 20,199,973 ETG
13 Gold Mint MNTP $0.1756 $336,351 $0 1,914,997 MNTP
14 Ethereum Gold Project ETGP $0.00001611 $95,362 $520 5,923,698,545 ETGP
15 Gold Fund GFUN $0.0005371 $82,688 $99 154,093,551 GFUN
16 Gold Blocks GB $0.003725 $58,518 15,563,873 GB
17 Gold Poker GPKR $0.001074 $5,648 $65 5,260,826 GPKR

Gold Backed Cryptocurrency Market Cap

  • The market cap of the Top traded Gold backed Cryptocurrencies is just $794 million, which is almost 0.05% of the total Cryptocurrency Market Cap of $1.73 trillion.
  • This infers that that Gold backed Cryptocurrency Market is very small compared to overall Cryptocurrency market.
  • A lot of more participation and awareness is required for this market to grow.
  • But one of the biggest concerns prospective investors have with the cryptocurrency world is volatility. Big price swings with virtual currencies mean great profits and massive losses can be reaped in minutes.
  • In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold 100 billion rupees ($1.4 billion) in crypto-investments, according to industry estimates. No official data is available.
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