Top 5 Gold Backed Cryptocurrencies
We are affiliated with several companies, if you opt to purchase a product we may get a commission at no additional cost to you.
Precious metals like gold are always a commodity in the trade market. Thus, with its increasing gold prices, the cryptocurrency trade market is turning to gold backed cryptocurrencies. The idea is new and innovative, but it has prospects of making cryptocurrency more stable. Here we’ll take a look at the first gold cryptocurrencies.
Cryptocurrencies are an extremely exciting investment opportunity. With the rising value of these digital assets, more investors are looking to get involved as opposed to staying on the sidelines. Unfortunately, many of these new investors don’t have much experience when it comes to analyzing risks and returns of various financial instruments.
This can make investing in cryptocurrencies a daunting task for those who lack a solid understanding of the market and its risks. As such, it’s important for you to understand what makes investing in cryptocurrencies different from other financial instruments like stocks or bonds. This article will discuss why gold backed cryptocurrencies are ideal for diversifying your portfolio.
Considering how relatively new these innovative options are, many traders are still unaware of where to begin. Here is the best gold backed cryptocurrencies list for 2022.
What are Gold Backed Cryptocurrencies?
Gold backed cryptocurrencies are digital derivative assets whose value is underwritten by the equivalent price in gold. Each gold-backed currency defines a single one of its tokens arbitrarily as having an equal worth of specific grams or troy ounces of gold. In short, it’s equal should present in reserves or trusted custodians as physical collateralized assets.
Some gold-backed tokens allow for the redemption of tokens back for gold. Unlike many other cryptocurrencies, it has theoretical value, and a gold-backed token value is tied to a tangible asset that cushions against price fluctuations. Most Gold-backed cryptocurrencies exist as ERC – 20 standard tokens, but there are some exceptions like Paxos’ PAX Gold.
Blockchain-based digital assets supported by gold and other real-world scarce commodities are increasingly attractive to investors looking to hedge their portfolio against weakening fiat currencies or regulation-bond stablecoins. The benefit of digital versions of gold over their physical counterparts is that it is divided into small units.
Top 5 Gold Backed Cryptocurrencies
Investors can consider this new alternative, but many are unsure where to start. Here are some top 5 Gold Backed Cryptocurrencies in 2022.
1. Perth Mint Gold Token
The Perth Mint Gold token is backed by gold in the Western Australia government’s Perth Mint. The government ensures the gold purity and weight by issuing gold certificates through the GoldPass app. After that, these certificates are then used to back the PFMT token. Rach tokens are valued on a 1:1 ratio and traded on KuCoin exchange.
However, PMGT is a competitive and cost-effective option for traditional gold assets like banked gold transfers and gold ETFs. Since there are no custody, insurance, or storage charges, it is also fungible with traditional gold markets.
Infini Gold manages the currency, and each PMGT can be verified in real-time against the balance of Gold pass accounts published by Perth Mint. In short, the investor no longer waits for monthly audits to check that the token is 100% fully-backed. However, the trader can ultimately redeem their PGMT holdings for physical gold even though their liquidity is relatively low.
2. Pax Gold (PAXG)
Pax Gold is an Ethereum token that runs on the Ethereum blockchain with one token corresponding to one troy ounce of gold. In September 2019, PAGX was launched by Paxos Standard, with tokens backed by London Good Delivery gold bars. All these are stored in vaults operated by Brin’s London Bullion Market Association, approved by the storage company.
It is the only gold-backed cryptocurrency directly redeemed for LBMA – accredited gold bullion bars.
One benefit of owning PAGX over physical gold is that holders can generate earnings on their holdings using one of the Decentralised Finance (Defi) applications running on the Ethereum network.
3. DigiGloabl (DGX)
A Singapore-based company provides these tokens with a value of 1gm of gold held in vaults in Canada and Singapore. Moreover, for added security, the bullion Association fully insures and accredits the vaults stored in gold.
The token offers a practical approach to dividing, redeeming, and transferring actual gold bars through buying and selling virtual gold in the form of tokens. The founder’s purpose is to create a digitization process for regular access to gold.
However, DigixGloabl charges traders a 1% fee to trade their tokens for actual gold. Digix Gold tokens are thinly traded, and the market cap is under $6 million.
4. Tether Gold (XAUT)
Tether is one of the most significant USD-backed stablecoins, but now it has a gold-backed token called XAUT. It is officially created by TG commodities limited; each XAUT is backed by one troy fine ounce of gold on the London Good Delivery gold bar.
Tether gold reserves are held in a Swiss vault, and the holders can check their serial numbers through the Tether website. Tether also enables investors to deliver their gold or redeem it for cash physically. However, the XAUT gold-backed cryptocurrency resides on TRON and Ethereum blockchains.
5. Gold Coin (GLC)
Peer-to-peer cryptocurrency attempt decentralization and economic freedom. The fractional nature of this gold-backed cryptocurrency means that one coin is only worth a fraction or one gram of pure gold. This means that Gold Coin has a shallow barrier to entry. This contrasts with other currencies and gold, where buyers can be pretty expensive.
Gold Coin, part of the Ethereum blockchain, has been around for many years. This is one of the safest options due to its stability and ease of entry.
Conclusion on Gold-Backed Cryptocurrencies
In a nutshell, gold backed cryptocurrencies are recommended for investors interested in gold. We know the investor wants the benefits of digitally freeing up physical gold as a hedge against volatility. But, digital currencies are more volatile. Supported by a provable physical gold reserve means they have a stable position like stablecoins backed by fiat. The gold-backed token enables users to convert it back into gold anytime. Thus, it is advised to confirm the project, check facts of physical gold reserves and ensure the project is secured, not a scam. However, based on the blockchain, supply can be publicly verified for Tether Gold, Paxos gold, gold coin, Paxos, and many more.
FAQ’s Relating To Gold-Backed Cryptocurrencies
Is there a gold-backed Stablecoin?
There is no gold-backed stablecoin currently in existence, but there are several projects currently in development that aim to create such a coin. One of the most well-known projects is Tether, which has been the subject of several controversies over the past year.
Can gold be cryptocurrency?
Gold cannot be considered a cryptocurrency as it does not have the properties of a digital or virtual currency. Gold is a physical asset that can only be transferred between two people through a trade. Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units.
Is Bitcoin backed by gold?
There is no explicit backing of bitcoin by gold, though some have suggested that the digital currency could be backed by physical assets. Bitcoin is based on a cryptographic protocol and is not subject to government or financial institution control. As such, it could theoretically be backed by anything that could serve as a reliable store of value, such as gold. However, there is no clear evidence that this is actually the case.
So, no, Bitcoin is not backed by gold. Bitcoin is a digital asset and does not have a physical form.
What is the best gold-backed cryptocurrency?
There is no definitive answer to this question, as it depends on a number of factors, including the specific features and characteristics of the gold backed cryptocurrencies in question.
