What Are the Gold-Backed Stablecoins?

In the last years, stablecoins started to gain popularity in the crypto community. According to the research conducted by the crypto exchange Binance, stablecoins driven quote asset volumes have grown from just over 35.78% of all volume one year ago to over 60.55% as of May 2019.

But, first things first. Let’s answer the question: What are stablecoins?

Stablecoins are cryptocurrencies created as a result of the high volatility of other cryptocurrencies, such as bitcoin. Their main feature is that they reduce the volatility and stabilize the value of the crypto token. How do they do that? You see, stablecoins are tied to a stable asset, for example, fiat currency (dollar, euro, yen), gold, or other precious metals.

In this blog post, we’ll focus on gold-backed stablecoins. Let’s find out more about them.

Gold-backed stablecoins

gold stablecoins

When it comes to gold-backed stablecoins, usually one token of stablecoin equals one gram of the gold. Since they’re tied to the gold, this stablecoin’s price can’t fall below the current price of the gold. A third party holds the gold in reserve.

In recent years, many stablecoins decided to use gold as a backup. Here are some of them.

Novem Gold (NVM) – transforming gold trading

novem gold backed stablecoin
Novem Gold

People have been trading with gold and other precious metals for centuries. Today, the gold industry has been facing many challenges such as the lack of ethical standards. Plus, it’s hard to validate a stored quantity and the ownership of the gold.

The bottom line is that the precious metal industry is filled with fraud, deception, and lack of transparency. And Novem Gold decided to change that.

The company created a better way for people to buy and sell gold. Novem Gold transformed the precious metal industry. How? With the help of blockchain technology, the company developed an immutable and secure environment for gold trading.

Novem Gold stores the gold in Liechtenstein, and once you buy it, you get digitally linked ownership of LBMA-certified physical gold.

Currently, you can collect some free NVM tokens with an airdrop. Join the giveaway today with Airdrop Alert.

Digix Gold Tokens (DGX) – gold on the blockchain

digix gold backed stablecoin
Digix

Here is a one more gold-backed stablecoin. Digix uses blockchain technology to ensure transparency, traceability, and security. The company represents physical gold with DGX tokens. One DGX token equals one gram of gold on Ethereum. Digix stores the gold in The Safehouse vault.

According to its white paper, Digix developed their own protocol called PoA (Proof of Asset) or PoP (Proof of provenance) to create a gold-backed stablecoin. The protocol can even be extended to other precious metals and physical assets. But that’s a whole other story.

GoldMint (MNTP) – pawnshop loans secured by gold

goldmint gold stablecoin

GoldMint is a blockchain platform built on the Proof-of-Stake algorithm and it helps gold owners to trade and invest in using gold assets. It’s worth mentioning that the company developed its own blockchain-based on proof-of-stake consensus. This consensus has several benefits such as high transaction speed and fixed commissions for transaction fees.

The platform has its native utility token MNTP (ERC20) or MNT (MINT blockchain).

Conclusion

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The concept of gold-backed stablecoins has been appealing ever since the price of bitcoin reached parity with gold in 2017.

Today, even some countries consider issuing their own gold-backed cryptocurrency. For example, Russia’s central bank announced that it would consider the use of a gold-backed cryptocurrency for international transactions.

With their popularity growing, we can say that we’re witnessing a gold rush in the crypto world.

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