What is Gold-Backed Digital Currency?
In the wake of the decline in the value of traditional crypto-assets, crypto believers are constantly on the lookout for new investment opportunities and innovative products that will enable them to continue to make a fortune. The fall of cryptocurrencies like bitcoin is often attributed to their price volatility as well as regulatory and application issues which erode investor and user confidence. With gold, there are no such concerns. For several years, gold has proven to be a durable, trustworthy, safe-haven asset and one of the most reliable ways to preserve wealth over the long term. This makes gold-backed cryptocurrency the perfect answer to the volatility seen in the crypto market, especially for those looking to secure financial stability.
Everything You Need to Know
Gold-backed digital currency is a form of stablecoin whose value is tied to that of gold. They combine the innovative capabilities of the blockchain technology with the relative stability of gold to provide a cushioning solution to the highly volatile cryptocurrency market.
To mitigate the challenges facing traditional cryptocurrencies and their extreme price swings, these assets are backed by physical gold through allocated or unallocated gold storage. Other than being pegged to gold, gold cryptocurrencies operate in a similar fashion to traditional cryptocurrencies like bitcoin.
How Gold-Backed Cryptocurrency Works
While each gold-backed cryptocurrency works differently, one universal principle binds them: they are all backed by a specific value of gold. As a result, the token being issued represents an amount of gold.
One popular cryptocurrency whose value is tied to the price of gold is OneGram. Each OneGram token is backed by one gram of physical gold, which help gives it stability.
What is the Difference Between Gold-Backed Cryptos and Other Digital Currency?
The primary difference between traditional cryptocurrency and that backed by gold is that while cryptocurrency initially attracts a small sum of money, gold-backed digital currency launch at a price determined by the market value of gold.
Because they are backed by gold, the value of gold-backed crypto assets does not fall below the price of gold. Often, gold-backed cryptocurrency commands a higher price than gold the more popular it is. The value of traditional cryptocurrency is determined through supply and demand as is the case for common stocks and is also affected by hype and perception.
Experts argue that perception is the primary driver of crypto prices. Other factors that affect the price of cryptocurrency include mining difficulty, energy usage, token utility, and investor behavior.
What Are the Popular Gold-Backed Digital Currencies?
Some of the most popular gold-backed digital currencies include:
- OneGram (OGC)
- Anthem Gold (AGLD)
- AurumCoin (AU)
- BullionCoin (XAAU)
- Currensee (CUR)
- Darico (DEC)
- DinarDirham (DNC)
- Flashmoni (OZG OZT)
- Gold Bits Coin (GBC)
- GoldMineCoin (GMC)
- GOLDUSA (GOLD)
- HelloGold (Goldx)
- OZcoinGold (OzGLD)
How to Buy Gold-Backed Cryptocurrency
While the method of buying token might vary from one gold-backed digital currency to another, you’ll generally need enough of either bitcoin or ethereum to buy gold-backed cryptocurrency.