Introduction
Cryptocurrencies Popularity is a well-known factor. With Bitcoin competing with the market share of gold, a lot of people are interested in investing in Bitcoinsand other cryptocurrencies. Despite facing a major drop in price by the beginning of 2022, now the market is stabilizing.
Crypto can be differentiated into different categories like Defi, NFT, utility tokens store of value tokens like Bitcoins and litecoin and yield framing tokens like aave- Siddharth sogani CEO of CREBACO
Cryptocurrencies are categorized into four major types based on their usage. As a currency, Bitcoin tops the charts. It helps to make cross-border payment transactions much cheaper and faster and has a bigger store of valueIt is required to dominate the markets pretty soon. Cryptocurrency is also taxed and perceived as an asset, and are called stable coins.These cryptocurrencies derive their value from an external asset. Gold GLC is linked to the value of Gold and USDT, derives its value from the US dollar. The stable coins provide more stability from fluctuation and are used as assets.
Some of the cryptocurrencies are used as finance special projects, focusing on solving issues like SIA and Decentraland, some of the coins are also used for fun, like dogecoin. Despite having different Cryptocurrencies, they are all subjected to market fluctuations. Higher volatility is a big drawback in Cryptocurrencies, and this is where gold-backed cryptocurrencies provide an upper hand. yes, gold-backed cryptocurrencies allow the user to purchase, trade, and hold physical gold without regard to any time or location. Here are the top 5 Gold-backed cryptocurrencies that you can invest in.
Technically what is gold-backed cryptocurrency?
These are cryptocurrencies that have their values derived from the price equivalence of Gold, and a single Unit of cryptocurrency is equivalent to a particular unit of gold, in most cases, One token is equal to one gram of gold, but this ratio can differ from one cryptocurrency to another. The gold is held in gold reserves, or third-party institutions that act as primary custodians.
The investment in gold-backed cryptocurrencies can increase returns from gold pricing, and the tokens can be redeemed back for gold. Most of the tokens will exist in the form of ERC 20 tokens. standard tokens traded on crypto exchanges.I will recommend watching this video from the coin Bureau channel dedicated to crypto regarding information. In this video, you will get to know all about cryptocurrencies and gold, their similarities, their differences, and digital gold DGX in a friendly narrative.
1) DigixGlobal
DigixGlobal is one of the most famous gold-backed cryptocurrencies. If you are an investor who loves to invest in physical Gold but does not have enough money, then this is the best option. DigixGlobal allows investors to invest in fractional tokens, transfer and redeem them whenever required. It is the best solution to micro accumulate gold, manage it effectively, also participate in Gold ETF. It is a very transparent procedure, and much less prone to fraudsters. The gold store in Singapore and Canada and the bullion association is the custodian.
It has a market cap of $1,818,093 and trades at $33.26 as of February 28, 2022 So how to buy Digixglobal? You just have to register on the official website, select a wallet, and buy the coins. Now, you can also make the payment using other cryptocurrencies. A single token of digits is equal to 1 gram of gold and is backed up by hundred grams of Swiss gold bars from Produits Artistiques Metaux Precieux( PAMP)
Another plus point is that it has no storage fees and is based on the Ethereum blockchain, stored on metamask and other ETH wallets. DGX is redeemable with the Gold amount equivalent. You can make a minimum purchase of 0.50 dollars in the tokens, for a gold ETF, it costs 150 dollars, and for a gold bar $50 to 600,000 dollars. Presently there is a total supply of 78000 DGX coins. A single coin costs around $58.41
2) TetherGold
TetherGold is another famous gold-backed cryptocurrency that provides investment in Gold with direct exposure to the real-time gold price. It is apt for individuals and non-institutional investors. Like other cryptocurrencies, it also gives access to ETF and other financial units.
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1 XUAt is equal to one Troy ounce of Gold on a London good delivery bar. It can be transferred easily from one wallet to another and is held on an ETM based valid and is available as both ERC20 and TRC20 tokens on the TRON blockchain. If you are in Switzerland, Gold will be delivered to you in any location. You can use a certain minimum number of XUAt tokens to redeem it in the physical gold.
It has an a’ total market cap of $ 201,823,499 as of February 2022. The price per coin is $1758.225, and it has a total supply of 85,417 with a volume of 1.0 million. One can make a minimum purchase of 50 XUAt.You have to visit the official website and create an account to get verified. Most of the purchases can also be made using US dollars, but make sure to analyze before investing in it.
3) PaxosGold
The next on the list is Paxos Gold having a market cap of about $319,973,111, it is one of the best investments as it has no custody fee charged for the tokens. Issued by Paxos.It is regulated by the New York State Department of financial services . PaxosGold provides greater access to high-quality gold from traditional markets. Using the token, one can transfer and store Gold faster without limitations. It is backed by one Troy ounce of gold with the 1:1 ratio. This Gold has an option of trading in the future that allows the user to trade perpetual or quarterly future contracts on FTX exchanges
You can purchase a minimum of $20 or 0.01 PAX. The price of the coin is $1767.58. It can be regulated by NYDFS and the futures are not regulated. This can be traded on multiple exchanges like Binance, Kraken and much more.You should have a look at this video from CNBC, where CEO of Paxos- Charles Cascarilla discusses Paxos gold.
4) Goldcoin
Gold Coin is an easy to invest peer-to-peer cryptocurrency focusing on decentralization and economic freedom. All the transactions occur at the highest speed of less than 2 minutes, and the coin is available in ERC20 format. It will be passed throughout any Ethereum wallet.Another interesting fact about gold coins is that it is available with all the benefits of a digital asset.
It can be easily divided and transferred within the network with greater transparency. The owner can redeem the cryptocurrency to physical gold at any time, and it can also be redeemed for Fiat currency. An ounce of gold is equal to thousand Gold coins. It is much less volatile when compared to other cryptocurrency giants.
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You have to register it on the formal official website and buy the gold coin, or it can also be brought using the ATM network of the issuer. One can also pay through debit or credit cards and cryptocurrencies, and it has a total market cap of 4.8 million dollars with a supply of 72,245,700.
5) Perth Mint Gold Token
While most of the cryptocurrencies backed up by Gold are produced by private companies. On the contrary, Perth Mint Gold Token is supported by a government project. Since 2018 it has been in the crypto market and is heavily validated by the Australian government. The government assures both weight and purity of the gold. Perth Mint gold token holders will be provided with a certificate to validate the purchase. This coin is backed up by Gold at a 1: 1 ratio, and is seen as one of the most cost-effective method to purchase gold.
It has an overall market cap of $1,992,264. The total supply of 932 and the price of a single PMGT is equal to $1901.63. Despite being a government-backed gold token, it has some disadvantages, and it is not widely available in most of the recognized exchanges for redeeming the PMGT tokens for physical gold, and there are no clear-cut numbers available for how many several tokens to be redeemed in exchange for physical Gold. 1 PMGT is similar to 1 Oz gold pass certificate of pure physical Gold and most exchanges will be done through Trovio. Also, the tokens can be traded over the counter of the gold market X A u and the Gold stored in Perth mints Central Bank.
What are the advantages of investing in Gold-backed crypto coins?
Well, when a comparison is drawn between normal and gold-backed cryptocurrencies, the latter is gaining more attention from investors who have a low-risk appetite. With the rising inflation and Geopolitical war situation in Russia and Ukraine investors have focused their investments on commodity-backed cryptocurrency projects. The cryptocurrency projects are seen as a rising safe-haven commodity as precious metals add up to the store of value.
Technically gold-backed cryptocurrencies come with the benefits of gold investment with scarcity and flexibility of the crypto world. It is the best form of investment to bridge the gap for investors who are not comfortable with cryptocurrency and its higher volatility. On comparing with usual cryptocurrencies, gold-backed cryptocurrencies offer greater benefits and ability.
Backing currency with Gold offers investors the major competitive advantage over other junior mining companies- Chris Torres, CEO of Asia Broadband
Conclusion
Some of the popular gold-backed cryptocurrencies like PAXgold, Tether Gold have reached the top 300 cryptocurrencies concerning the market cap. Especially in the last year, the market cap has exponentially grown for these cryptocurrencies showing that it is attracting investors. Based on experts, the recent tension between Russia and Ukraine has increased the bullion’s appeal and the demand for gold-based altcoins has increased. When compared to currency-based stablecoins ,gold-based stablecoins do not offer much utility, yet it is a convenient way to invest in Gold.
These coins come with benefits such as ease of investment in Gold through alternative digital means and no hassles related to stories of the physical gold oven to higher security- Avinash Shekhar, CEO zebpay.
If you ask me personally, it is a better option. The smooth and fast settlement, very less acquisitions, and higher transferability with greater transparency are some major advantages. There are risks associated with the holding company backing the Gold, to provide authenticity. There is also a limit to how much Gold can be backed by a cryptocurrency. Gold-backed cryptocurrencies have greater potential to grow in the coming future. But before you invest in them, make sure to know the company and authenticity of Gold provided.