The world of cryptocurrencies has emerged as a compelling alternative to traditional finance, democratizing investments and shifting power from institutions to individuals. As digital assets like Bitcoin, Ethereum, and thousands of others continue to shape and disrupt economies, a new class of cryptocurrencies has risen to offer a unique proposition.
Gold backed cryptocurrencies – a fascinating blend of old and new, merging the reliability of the world’s oldest store of value with cutting-edge blockchain technology. This fusion creates an asset class that offers the best of both worlds: the potential for growth and innovation found in cryptocurrencies and the stability and reliability inherent in gold.
What is Gold Backed Cryptocurrency?
A gold-backed cryptocurrency is a type of digital or virtual currency that is tied to the value of gold. In essence, every unit of such cryptocurrency represents a certain amount of physical gold, typically measured in grams or ounces. This gold is usually stored in secure and insured vaults, with each unit of the crypto asset or token representing a claim on a specific quantity of gold.
Gold backed cryptocurrencies aim to add a layer of stability to the notoriously volatile crypto market, providing a hedge against market downturns and establishing a connection to a tangible asset. They marry the advantages of digital currencies – such as easy transferability, divisibility, and borderless transactions – with the inherent value, longevity, and stability of gold, making them a compelling choice for investors seeking a balance of risk and reward.
if you are looking to make safe investment in cryptocurrencies, we have complied a list of the best gold backed cryptocurrencies from around the world.
1. Tether Gold: XAU₮
What better way to start the list than with the name of a gold backed crypto token that belongs to the house that owns the largest stablecoin in the crypto market. Tether Gold (XAU₮) is a gold-backed digital asset pegged to the value of one troy ounce of gold. It was launched by Tether, the company behind the USDT stablecoin, in January 2020. However it is issued by TG Commodities Limited.
The purpose of XAU₮ is to provide a stable and secure way for individuals and institutions to invest in gold without possessing it physically. This makes it a more accessible option for non-institutional investors, who may not have the resources to purchase large amounts of gold.
Each XAUT token represents ownership of one troy ounce of gold, which is stored in a vault in Switzerland. The tokens are issued by TG Commodities Limited, a new entity created by the Tether team.
In addition to providing exposure to the gold price, XAUT tokens also give investors the ability to access ETFs and other traditional financial assets. This is because the tokens are backed by physical gold, which can be used as collateral for loans or other financial transactions.
Tether Gold is backed by physical gold that is stored in Brink’s vaults in London. The company claims that for every XAU₮ token issued, there is one troy ounce of gold held in reserve.
Features:
- Users need to open an account at app.tether.to and have it verified to buy the tokens.
- Only US dollars can be used to buy the tokens.
- 1 XAU₮ token equals or represents one troy fine ounce of gold on a London Good Delivery bar.
- It is transferrable from one on-chain Tether wallet to another.
- XAU₮ token is an ERC-20 token held on an Ethereum-based wallet and as a TRC20 token on the TRON blockchain.
- XAU₮ Tokens redeemable back to physical gold for verified users and for a certain minimum number of XAUt tokens. The gold is delivered to any location in Switzerland.
- Tokens can be redeemed to gold and then the user request for it to be sold and cash sent to them minus fees.
2. Paxos Gold: PAXG
The toughest competition to XAU₮ is Paxos Gold, with both always in a cat and mouse chase around the clock to be top the list of gold backed crypto tokens. Paxos Gold (PAXG) is a digital token that is backed by physical gold and is issued by Paxos, a regulated custodian. Each PAXG token is equivalent to one fine troy ounce of gold, which is stored in professional vault facilities.
PAXG is an ERC-20 token, which means users can can own, transfer, store, and bet on gold easily and faster – of course, without the limitations of the size and weight of the large gold bars that are not easier to store, transfer ownership, or even subdivide.
There are a few reasons why someone might want to invest in PAXG. First, it offers a way to own physical gold without the need to physically store it. This can be a good option for people who want to invest in gold but don’t have the space or resources to store it themselves. Second, PAXG is a digital asset, which means that it can be traded quickly and easily. This makes it a good option for people who want to trade gold on a regular basis.
Features:
- 1 PAXG is backed by one fine troy ounce of gold at a ratio of 1:1.
- Minimum purchase: $20 or 0.01 PAXG or t oz of gold. For Major Gold ETF futures, it is 1 share. The minimum purchase for LBMA 400 t oz gold bar is $800.
- No custody fee is charged for tokens. For the Major Gold ETF, it is 19-40 bps per year, physical gold coins and other products is 10-100 bps per year, unallocated gold is 1-10 bps per year, and other gold tokens is up to 100 bps per year. LBMA 400 t oz gold bar has a fee of 5-25 bps per year.
- Access to Major Gold ETFs, Gold Futures (COMEX), other gold tokens, and the ability to redeem with physical gold
- Regulated by the NYDFS. Futures are not regulated.
3. Gold Coin (GLC)
The next gold backed crypto on the list is believed to bring economic freedom to the world. Gold Coin (GLC) is a peer-to-peer cryptocurrency that aims for decentralization and economic liberty.
Investors are attracted to the gold backed crypto GLC as the transactional confirmation speed is just two minutes, beating many of the cryptocurrencies out their in the market. The ERC-20 coin can be stored and used through any Ethereum wallet. It is backed at a ratio of 1000 GoldCoin per ounce of gold, which makes it less volatile than Bitcoin and other altcoins not pegged to any stable asset.
It has all of the advantages of a digital asset over gold or fiat money, such as greater divisibility, portability, and transferability. Users can redeem the cryptocurrency for physical gold at any time they want.
Besides buying the coin from various crypto exchanges, interested investors can also buy it from the issuer or Goldcoin.com. It is also available through the issuer’s ATM network, which makes it easy to pay via popular methods like debit or credit cards.
Features:
- GLC is buckled in a ratio of 1:1000 GoldCoin per ounce of gold.
- The platform also scales through on-chain and off-chain scaling methods.
- It is mined through the proof of work algorithm, just like Bitcoin. The blockchain also supports SegWit and Lightning.
- Minimum Purchase: Not specified
Also Read: Top 10 Cryptocurrencies To Look Forward to in 2024
4. DigixGlobal (DGX)
This one is on the list of the most popular gold backed cryptos for people who are always short on money but still wish to invest like pros. DigixGlobal (DGX) is for individuals who are interested in investing in gold but have limited funds. Meanwhile, if you are interested in investing in gold or silver, check out the best place to buy gold here!
DGX also enables anyone to micro-accumulate gold and properly manage it on a 24/7 basis with few restrictions. Users can invest in Gold ETFs bearing fractional tokens using DGX. Obviously, the gold backed tokens can be traded on cryptocurrency exchanges.
The physical gold backing the crypto is kept by the firm in Singapore (The Safe House Singapore vault) and Canada, with members of the Bullion Association acting as custodians.
Features
- 1 token, or DGX, is equal to or represents 1 gram of gold. Backed by 100-gram Swiss gold bars from Valcambi, Produits Artistiques Metaux Precieux (PAMP), Metalor, and other refineries.
- It is based on Ethereum blockchain and stored on Metamask, and other ETH wallets.
- Tokens have no demurrage (storage) fee. ETF fee is a storage fee that is 0.4% pa. The physical gold bar storage fee is 0.6%, and the transaction fee for sending the tokens is 0.13% per transaction. The recast or token conversion fee to physical gold is 1%.
- Minimum purchase: $0.50 for the tokens, $150 for the gold ETF, and $50 to $600,000 for a gold bar.
5. Meld Gold by Algorand
Meld Gold, like other gold backed crypto tokens, makes gold available to all investors. They can transact gold in real-time with the tokens, eliminating the volatility associated with gold acquisition.
The Meld Gold token also protects investors from severe inflation, which occurs in conventional cryptocurrency marketplaces. It also eliminates investment risks for investors and delays transaction times.
The token is used to digitize the Meld Digital Gold Certificates, which are backed by physical gold in a ratio. The tokens can be stored on the Algorand Wallet, which allows users to track the value of their tokens. It, like other gold-backed currencies, provides for worldwide decentralized storage and holding at any location and time.
Features:
- Available on OTC markets and Meld partners.
- The Algorand on which the tokens are issued supports atomic swaps and standard asset tokenization features.
- The gold backed token can be converted to any fiat or crypto on an exchange, and back to gold certificates or physical gold.
- Minimum purchase: Not specified.
Also Read: Bitcoin vs Gold: Are Investment Opportunities Shifting?
To Conclude:
As the world continues to witness the rise of cryptocurrencies, the allure of gold backed tokens will likely grow, attracting both seasoned investors and newcomers seeking a secure and innovative way to preserve and grow their wealth.
Gold backed cryptocurrencies are likely to play a significant role in shaping the future of finance and investment. Gold backed cryptocurrencies provide a bridge between the age-old appeal of gold as a store of value and the modern advancements of blockchain technology.
Disclaimer:
Remember, when exploring the world of gold backed cryptocurrencies, it’s crucial to conduct thorough research, understand the specific features of each project, and assess your own investment goals and risk tolerance. With a carefully considered approach, you can embrace this exciting evolution of digital assets and embark on a journey towards a more diversified and secure financial future.
