Digital gold, gold backed Cryptocurrency
As we well know, many times we seek refuge from volatility in stablecoins, cryptocurrencies that are paired one to one with another type of asset, especially those backed by fiat currency such as the US dollar, but within this category there are also those that are backed by the price of some natural resource, and while they are not very popular, there are two cryptocurrencies backed by gold that are arousing great interest at the moment.
Gold backed cryptocurrencies are gaining popularity. Source: pxfuel.com.
Among the cryptocurrencies backed by some natural resource we Venezuelans know well the Petro, a token issued by the Venezuelan government in early 2018 and which is backed by the reserves of several natural resources of Venezuela, essentially oil, gold and gas. But the Petro was not the first cryptoasset backed by a natural resource, in 2016 Open Ledger made the launch of Digix Gold Token (DGX), an ERC-20 token whose price is linked to real gold, i.e. 1 DGX is equivalent to 1 gram of gold, this being the first cryptocurrency backed by gold.
And after DGX, two other cryptocurrencies were launched with gold backing, namely Pax Gold and Tether Gold, and they have recently become the market players in this cryptocurrency segment, with market capitalizations that have increased considerably recently. This is perhaps a sign that more and more investors are looking for ways to take refuge from the global uncertainty that the war in Ukraine and the US Federal Reserve's rate hike have brought about.
Gold-backed cryptocurrencies seem to serve as a haven from volatility. Source: piqseles.com.
Let's look at some facts about this cryptocurrency pair that are catching investors' attention.
Pax Gold (PAXG)
This is the second cryptocurrency launched on the market backed by gold, it was issued in 2019 by PAXOS, with the aim of making gold more marketable, allowing investors to be able to purchase even very small amounts of gold through the cryptocurrency. According to data from Coinmarketcap, today it trades at $1,945.73, and has a market capitalization of $618,103,668.
Screenshot taken from Coinmarketcap.
In the following image we can see how its market capitalization has increased in the last month, practically we can see how since the middle of last month it has had a strong growth.
Screenshot taken from Coinmarketcap.
This ERC-20 token, based on the Ethereum network, is backed by real gold bullion, each token is backed by one fine troy ounce (t oz) of a 400 oz gold bar certified by London Good Delivery, and stored in the vaults of UK gold broker Brink. Token holders thus become holders of a piece of real gold.
Tether Gold (XAUt)
Esta criptomoneda fue creada por “TG Commodities Limited” teniendo como respaldo al oro, y fue anunciada al mercado en enero de 2020. Según datos de Coinmarketcap, hoy cotiza a $1,942.41 y tiene una capitalización del mercado de $205,019,280.
Screenshot taken from Coinmarketcap.
And in the following image we can see how its market capitalization has increased in the first months of the year, showing a growth of more than 100% from the beginning of March until now.
Screenshot taken from Coinmarketcap.
Likewise XAUt is available as an ERC-20 token on the Ethereum blockchain, each XAUt represents ownership of one fine troy ounce of physical gold in a London Good Delivery ingot, which the company claims is held in a Swiss vault under its control, and at any time XAUt owners can check the details of their gold allocation associated with their address by searching the Tether Gold website.
As we can see, backing cryptocurrencies with natural resources, such as gold, is gaining interest among investors, who are looking for an alternative to protect their assets in the face of times of great uncertainty, so perhaps it is no coincidence that this cryptocurrency pair has gained ground in the market in the last month, even since the beginning of the year, when the global crisis and uncertainty echoed in the markets.
Thanks for coming by to read friends, I hope you liked the information. See you next time.
Hello @emiliomoron, I believe that the alternative of backing some cryptocurrencies with important assets such as gold or oil is more than asserted, since these and other natural resources rarely suffer large price drops (except oil and we already know why), this is what generates confidence, the feeling of price stability and the "safe" support.
really thanks for this information, I had not heard of these cryptocurrencies, I will investigate a little more about it.
Hi @tocho2, really the feeling of stability makes people put their eyes on these alternatives, at least gold is a resource that rarely depreciates in value. Thanks for commenting friend, greetings!
I did not know if there is any Crypto bagd by the gold but it's new thing for me and I will do more study about it. Nice post
Hi @emiliomoron it is important to note that there are digital assets that link the word gold to their name, but are not backed by this precious metal. Therefore, before buying or investing in an asset backed by gold is necessary to study thoroughly its composition, if it is backed or not and who is the issuer, very good and interesting information that you leave in your publication, I read it carefully, thank you very much and success.