Cryptocurrencies became popular –when Bitcoin’s price touched the price around $1200 which was the value of one ounce of Gold in March 2017 – the movement to a crypto gold rush began, with multiple projects presenting their tokens backed by the precious metal. Gold-backed cryptocurrency is a type of crypto stable coin where each token is backed with physical gold. With the token price pegged to the current gold price, there is less price volatility compared to Bitcoin or other altcoins.
By nature, gold-backed cryptocurrencies work similarly to digital assets. You can purchase and sell them via crypto exchanges, hold them in your wallet, and you can usually sell them anytime you wish. Like Bitcoin, gold-backed tokens are powered by blockchain technology, which – among other features – allows you to trade digital assets 24 hours a day, 365 days a year.
Gold-backed cryptocurrency tokens have emerged as a new, commodity-pegged stable coin in the crypto market. Developers have had an interest in creating a gold-backed digital currency since the earliest days of the industry. Gold-backed digital currencies link one token or coin to a specific quantity of gold (for instance, 1 token equals 1 gram of gold). The gold, like dollars or other fiat currency, must be held in reserve, typically by a third party.
InfiniGold launched PMGT (Perth Mint Gold Token) as the first digital gold token on a public block-chain backed by government-guaranteed gold. PMGT allows you to trade and hold gold stored at The Perth Mint on the blockchain. PMGT tokenises GoldPass certificates, where 1 PMGT = 1 oz.
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 blockchain 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. Additionally, there’s also Darico (DEC), Block note (BNO), Aurusgold (AWG), Cash telex (CTLX), Blockstock (BSO, Coinshares/Blockchain.com MKS (DGLD), G-coin (XGC), Goldnugget (GNTO), Goldmint (MNTP), Goldfund (GFUN), Gramgold coin (GGC), PAX gold (PAXG), Karatgold coin (KBC), and HelloGold (HGT) to name a few.
Gold-backed cryptocurrency tokens have emerged as a new, commodity-pegged stable coin in the crypto market. While 30 Gold-Backed Crypto Attempts Have Failed, 77 Existing Blockchain Projects Attempt to Leverage the Precious Metal’s Backing.
As we can see from the below table, the market cap of the top traded Gold-Pegged Cryptocurrencies is around $794 Million, which is around 0.05% of the total Cryptocurrency Market cap of $1.73 trillion. This infers that there is Gold-backed Cryptocurrency Market is very small compared to the overall Cryptocurrency market. A lot of more participation and awareness is required for this market to grow.
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 total crypto-investments, according to industry estimates. No official data is available.
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