Crypto Academy Week 7 - Homework Post for [@yohan2on]. Stable Coins - Part 2

I still remember when I first heard Robert Kiyosaki say that “gold is God's money”. That was something that impacted my life 8 years ago.

I remember exactly the way he did it... he took a dollar bill out of his pocket and showed it to the camera and said: "this is man's money, this is just a piece of paper with no value... instead", he started to say: "Gold is God's money, the one that truly has value, and it is where I invest".

_{Gold is always Reliable. Source: https://www.usagold.com/cpmforum/2019/10/gold-is-gods-money-says-author-kiyosaki/}

I recognize that I have a lot to learn, but one thing I do know is that if Robert Kiyosaki gives you advice, you better listen to it. That's why I've chosen to talk about Digix (DGX) for my next assignment with Professor @yohan2on.

DIGIX

Digix is a project that facilitates the purchase of gold through cryptocurrencies so that investors don’t need to physically own it, nor allocate space for its storage. On the contrary, the representation of the amounts of gold that are part of their property will be fixed in tokens.

_{Digix Gold Token, Source: https://www.cryptoninjas.net/2018/07/02/digix-unveils-new-branding-in-the-push-for-adoption-of-dgx-gold-token/}

This operation, in which gold is represented in tokens, takes place on the decentralized platform of Ethereum smart contracts, which guarantees its transparency, security, and immutability. Digix uses these qualities for the management and trading of gold.

The platform manages two tokens, Digix Gold (DGX) and DigixDAO (DGD).

DGX

Digix Gold Token is a stablecoin secured by real gold, 1 DGX = 1 gram of gold. With the USD price becoming volatile, experts say DGX is a future stablecoin trend.

DGX tokens are created through a smart contract that receives Proof of Assets (PoA) cards and are generating token units for each gram of gold. Each DGX token will always represent 1 gram of gold.

_{DGX price fixed in gold, Source: https://cryptoadventure.org/is-the-glittering-of-gold-tokenization-worth-the-hype/}

In addition to this, it's also possible to perform the process in reverse, investors can exchange 100 DGX tokens for 100 grams of physical gold, which will be sent to them by mail or delivered in person depending on their location.

The fundamental objectives of this token are to facilitate the ownership and settlement of gold assets and also to provide a more stable option to the cryptocurrency market.

DigixDAO (DGD)

Although DGX tokens can be exchanged for gold, this doesn't work in the same way with DGD tokens. In contrast, DGD tokens grant voting rights. Their owners will be able to take votes on how funds are allocated and will be able to make decisions on any company proposals.

What makes Digix different?

How gold bars are issued. Its form of allocation is immediate.

Digix adds liquidity to the investment made in gold and avoids the inconveniences of its possession and commercialization, giving it also the touch of ease and physical security in transactions.

On the other hand, Digix also features a physical gold bar. Through the investment, gold bars are acquired from the LBMA refinery, which includes assay certificates from refiners such as Nadir Bullion, PAMP Suisse, Valcambi, and others.

Then there is Proof of Assets (PoA), which is a protocol developed by Digix that is responsible for proving the existence and ownership of an asset on the decentralized ledger. In this case, the asset is gold, and the blockchain on which it is registered is Ethereum.

In this process, the creation of asset cards is carried out in which the chain of custody is certified by sequential digital signatures, integrated by the supplier, the custodian, and the auditor of the precious metal. The validation of each one is done through the purchase receipts and deposit receipts, provided and uploaded to the blockchain.

Benefits:

1.Stable in price, but likely to grow: The stability of a stablecoin depends on its collateral, e.g. Tether (USDT) Depends on USD. However, USD and other fiat currencies often fluctuate, especially when there is a change in the political-economic situation of the issuing country or the forecast of an economic crisis.

On the other hand, the asset used to secure DGX is a rare and precious metal that is considered a great growth and value stabilizer.

2.Safe storage: Gold in bullion form is quite expensive and difficult to store safely. With DGX, gold bullion becomes tokens on a blockchain platform. Holding DGX is similar to storing "gold" in wallets inside our phones and computers.

3.Gold at a reasonable cost: Normally, for gold, investors need to buy the whole bullion, but with DGX, investors can own gold with small units and budgets on an electronic platform.

4. Advanced, transparent security technology: DGX uses the Proof of Provenance (PoP) protocol on the Ethereum blockchain that requires validation from all third parties to ensure that every process is safe and secure. Allocation bullion will be fully transparently registered on the chain.

Conclusion

The advantages that Digix has brought with its gold-backed tokens could mean continued growth for the future. This is due to the stability that investors can see in its offer and the security that they will have that every gram of gold will be continuously registered, audited, and verified in a blockchain.

Another convenient aspect is the possibility of investing without the real need of having to buy the asset in physical form.

The arrival of the DGX token is just the beginning of the multiple purposes it can achieve. Its gold backing creates opportunities for its disposition in other areas, such as inheritances, trusts, and use in loans.