Countless civilizations have prized gold bullion for its beauty and intrinsic value. Merchants across the world understand the allure of gold bullion, making the precious metal extremely liquid.
Due to its value, many worry about buying and storing physical gold bullion. Others do not want to attract attention to themselves by potentially having others find out they have enough money to buy gold coins, bars, or rounds.
As a result, cryptocurrencies backed by gold, which can be bought and sold on exchanges like Goldexchange.com, have grown in popularity. Gold-backed digital coins open up investment opportunities as buyers can purchase in fractional amounts, meaning any amount of money can be used to purchase real-world gold.
Digital Gold’s Colorful And Dynamic History
Many have tried to capitalize on the allure of gold bullion by offering digital options. Back in the 1990s, Douglas Jackson and Barry Downey launched a virtual endeavor known as E-Gold. Backed by physical bullion, the digital coin rapidly became popular as users conducted cross-border transactions and moved money anonymously.
While E-Gold reached great heights, the project eventually ran afoul of government authorities in the U.S., who accused E-Gold’s team of not working hard enough to stop illegal transactions.
After his arrest, Jackson eventually accepted a plea deal that subjected E-Gold to many restrictions and regulations, leaving the once-popular idea a shell of its former self.
The concept of digital gold remains popular decades later through a variety of virtual offerings, in the form of cryptocurrency backed by gold. Issued coins are backed by physical bullion stored securely by an outside custodian.
Many projects offer a variety of assurances to holders that their digital coins are properly underpinned by actual bullion. Some solicit and publish the results of third-party audits. Others set up live streams and cameras so investors can observe and check bullion holdings in real-time.
Gold-backed cryptocurrencies are growing in popularity for a few reasons. Many find satisfaction in knowing their investments cannot dip below a certain point (the spot price of gold). Others enjoy the potential of gold-backed cryptocurrencies booming in popularity and rising to a value that eclipses the day’s gold bullion spot price. Many find it much easier to manage and transact digitally than having to organize, secure, and make arrangements to buy or sell physical gold bullion.
What To Understand When Buying Gold-Backed Cryptocurrencies
Scams and false promises are abundant in the world of gold. Prospective investors should be smart about the gold-backed crypto projects they invest in. Some make claims about bullion reserves that are non-existent. Others make it very hard to redeem coins for physical bullion.
Before buying any gold-backed cryptocurrency, people should research the project, team, and security measures. Legitimate projects are built on solid foundations, like the Ethereum blockchain, and provide a range of measures to secure accounts, like two-factor authentication. A crypto project that fails could leave investors in trouble.
Prospective gold-backed cryptocurrency investors have a wide range of coins and exchanges to choose from. A few popular coins can be found on many platforms and have a strong reputation in the stablecoin world. Well-known gold-backed cryptocurrencies include:
Perth Mint Gold Token (PGMT): PGMT is backed by gold bullion reserves stored in the Perth Mint, managed by the Government of Australia. Holders can instantly verify physical gold bullion backing each virtual coin through issued digital certificates. Gold-backed coins with links to a national government’s bullion hold a lot of weight in the stablecoin world, as these types of coins are often the first choice for new investors who might be a bit uneasy about the world of crypto.
DigixGlobal (DGX): DGX coins are backed by a gram of physical gold stored in vaults across Singapore and Canada. DGX is unique as a fractionalized asset, which means bullion can be virtually divisible in any amount. Fractionalized gold opens up investment opportunities for people who might not have the financial stability to invest in physical gold bullion trading at a high spot price.
Tether Gold (XAUT): Tether’s USD-backed stablecoin is infamous in the cryptocurrency world. The project also offers a gold-backed option known as XAUT, underpinned by a troy fine ounce of physical gold bullion through TG Commodities Limited.
Investing In Gold-Backed Crypto
Gold-backed cryptocurrency is an exciting investment opportunity for people curious about crypto’s potential while still enjoying physical bullion’s stability. Investors have a variety of coin options and exchange platforms to buy, sell, and trade precious metal-backed virtual currencies.