Gold-Backed Cryptocurrencies: Icing On An Already Tasty Cake?

Authored by John Rubino via DollarCollapse.com,

The blockchain has discovered gold (or gold has discovered the blockchain). Either way, this means several things.

 

First, the decades-long dream of a gold-backed cybercurrency may finally be realized. Second, gold and probably silver are looking at a big new source of physical demand. Third, the huge number of gold-related initial coin offerings (ICOs) in this largely unregulated pipeline will require buyers to learn how to tell the legitimate offerings from the scams.

Two probably-legitimate examples:

 

UK’s Royal Mint Launches Gold-Backed Cryptocurrency

(Cointelegraph) – The UK’s Royal Mint, the institution responsible for producing all the physical money the country has for circulation, has announced the launch of its own gold-backed cryptocurrency.

 

The Blockchain-based coin, called Royal Mint Gold (RMG), is a digital representation of gold stored in The Royal Mint vault.

The Royal Mint Bullion, the Royal Mint company that sells physical gold, is the first company to allow customers to hold gold-backed assets on Blockchain, Tom Coghill, RMG’s Commercial Lead, stated in an interview with Express.co.uk. Coghill also mentioned that one RMG coin is equal to one gram of gold, adding that “it’s real gold you’re holding when you’re holding our RMG.”

A recent report published by the World Gold Council (WGC) compared Bitcoin and gold, declaring that though Bitcoin saw a higher growth in value in 2017, gold would remain an important store-of-value investment.

Coghill claimed that Bitcoin investments are more uncertain than investments in gold:

“Gold has probably had an argument that it’s been a store of value for 6,000 years, bitcoin’s a bit younger and the future of bitcoin is uncertain.”

——————–

Cryptocurrency backed by gold being developed by Perth Mint to entice investors back to precious metals

(ABC) – Australia’s biggest gold refiner, the Perth Mint, is developing its own cryptocurrency backed by physical precious metals.

 

The ambitious plan, which is subject to a confidentiality agreement, will make it easier for consumers to buy gold.

The mint also plans to make use of blockchain technology, first used as the core component of the digital currency Bitcoin, where it works as a public ledger for transactions.

In the 10 years since its inception, blockchain has been used to track transactions in industries from agriculture to land registration and the music recording industry.

For the Perth Mint, the need to bring investors back to precious metals after a boom in alternative investments such as cryptocurrencies posed an opportunity, according to chief executive Richard Hayes.

“I think as the world moves through times of increasing uncertainty, you’re seeing people look for alternate offerings,” he said.

“And you’re seeing this massive flow of funds into the likes of Bitcoin at the moment because people are looking for something outside of the traditional investments.”

But Mr Hayes said the volatility of some of the current cryptocurrencies meant they did not suit all investors.

And that is where a gold-backed offering may fit.

“With a crypto-gold or a crypto-precious metals offering, what you will see is that gold is actually backing it,” Mr Hayes said.

“So it will have all the benefits of something that is on a distributed ledger that settles very, very quickly, that is easy to trade, but is actually backed by precious metals, so there is actually something behind it, something backing it.”

Some thoughts on gold-backed cryptocurrencies (or tokens or whatever the correct term ends up being):

24 hour trading

Most financial markets have trading hours that are limited to the business day. Which means that most US investors can buy and sell, say, Amazon stock or silver coins only when domestic markets are open. Owners of a blockchain asset, in contrast, can wake up in the middle of the night, see an accurate quote, and act on it instantly. Whether this is a good or bad thing depends on the temperament and self-control of the individual. It’s possible that we’re creating a financial time-suck comparable to social addictions like Facebook and Instagram. And maybe a new danger for sleepwalkers…sleep trading?

On the positive hand, when things spin out of control in Asia or Europe, American owners of crypto-gold won’t have to wait until morning (which may be too late) to move their assets out of harm’s way.

Is it allocated?

Lots of different kinds of gold and silver accounts are already available, with the biggest differentiator being the ownership of the bullion sitting in custodial vaults. With allocated accounts buyers own specific metal bars, while with unallocated accounts buyers are in effect creditors of the company running the fund. The former is vastly safer and should be the only way that anyone ever owns remotely stored precious metals, including cryptos.

Good for gold/silver price?

Precious metal cryptos might engage some of the animal spirits that have been driving the bitcoin bull market — especially now that existing cryptos are correcting hard, thus reinforcing the lesson that these currencies aren’t backed by anything real. It’s possible that the contrast between bitcoin and crypto-gold will become a major topic of conversation in 2018, with the latter looking good by comparison and attracting serious speculative cash.

Existing tokens

It turns out that there are already a number of gold-backed cryptocurrencies out there. Here’s a list compiled by GoldScape:

Gold-Backed Cryptocurrency Directory
This is a current list of gold-backed cryptocurrency. This is a directory and not an editorial endorsement, so research all of the alternatives before investing. Some of the cryptocurrencies listed here don’t detail how they store and account for gold either, so proceed with caution. Any questions regarding each coin should be referred to their social media channel or forum listing.

Since this post was first published there have been new coins added to the list and some are now ready to buy. The list is now sorted in order of availability.

Flashmoni (OZT)
Location: UK
Website: flashmoni.io
Flashmoni is a blockchain-powered fintech company that offers a physical gold-pegged cryptocurrency, innovative payment solutions and a smart contract-based advertising solution. In addition to using gold to back their tokens, they also plan to raise funds to directly operate mines to “improve miner’s working conditions, their lives and of the communities where they live.”

There are two gold-backed tokens: OZG which is a private token pegged with 24 K gold stored in Dubai’s DMCC Free Zone and in Singapore. 1 OZG = 1 grain of gold (1 grain is approx 0.065 gram). OZT is the public token tradable on crypto exchanges and OZTs core value is 1/20th of the OZG.

GoldCrypto (AUX)
Location: Belize
Website: goldcrypto.io

AuX tokens by GoldCrypto are a cryptocurrency backed by physical gold. Currently, each 750 AuX Tokens will be backed by one ounce of gold (approximately US$1.70 per AuX Token). This gold backing per AuX Token then progressively increases.

Gold Bits Coin (GBeez)
Location: Australia
Website: goldbitscoin.com

Gold Bits Coin is a gold-backed crypto but the site and White Paper is light on details. It says that each coin is “backed by real gold”, but it doesn’t say how much gold is in each coin, or how it is stored. Gold Bits Coin Pre-ICO is on until 31 January 2018.

XGold Coin (XGC)
Location: Panama
Website: xgold.lu

XGold Coin (XGC) is a gold backed digital crypto-currency option. The price of one XGC Coin at initial pricing is based on a single gram of Gold. PRE-ICO First Round is on until 10 February 2018 and is offering a Pre-ICO 35% bonus.

AurusGold (AWG)
Location: Netherlands
Website: aurus.io

AurusGold is fully-allocated, gold-backed cryptocurrency. The Aurus asset tokenising protocol is used by top European gold traders to tokenise 99.99% LBMA approved, fully audited gold under the AurusGold (AWG) currency.

PureGold (PGT and PGG)
Location: Singapore
Website: puregold.io

Puregold is a payment gateway using Gold backed cryptocurrency. They offer two digital tokens called PGT for transactions; and PGG which is a cryptoasset backed by physical gold. The company uses physical gold (of 999.9 quality) as its security. Puregold’s gold reserves equal or exceed its circulated amounts of PGG gold-backed tokens. The physical gold is stored by a third party in a decentralized storage unit that Puregold stores investment grade gold, gold jewellery, small ingots (up to 100 grams) and coins. Puregold is part of Puregold.sg, which is a private mint in Singapore with its own in-house factory producing gold and bars. The ICO for Puregold runs from 15 January 2018 to 14 March 2018

Reales (RLS)
Location: Estonia
Website: realescoin.io

Reales coin is a token that combines a basket of precious metal and cryptocurrencies. The breakdown of each token is 10% physical gold, 35% physical silver, 20% Bitcoin, and 20% for ICO’s and alt-coins (total 85%). The remaining 10% is for company’s budget and 5% for operational costs. Reales ICO ends 8 March, 2018.

Icing on the cake

The forces driving precious metals higher (out-of-control credit creation pretty much everywhere, geopolitical chaos in much of the world, bond and stock bubbles that should, if history still matters, burst shortly, and the looming mass devaluation of fiat currencies) are already nothing short of spectacular. So gold and silver don’t need the blockchain to be big winners in the next few years.

Still, the number of gold-related blockchain products is apparently going to soar in 2018 as the big gold players stake their claims. The result? A potentially significant jump in demand for physical gold as all these promoters acquire metal to back their offerings. So while gold is likely to soar in any event, the blockchain connection might be a big help. Think of it as icing on an already tasty cake.

Comments

Looney 38BWD22 Feb 2, 2018 2:42 PM Permalink

 

Guys, please stop saying “CryptoCarnage”? There ain’t no carnage!

I just checked the price of the BitCoin that I ordered on eBay the other day and… it is still $0.99 a pop!

I’m itching to buy another one. THAT would quadruple my 401K! I think?   ;-)

Looney

In reply to by 38BWD22

BaBaBouy Looney Feb 2, 2018 2:43 PM Permalink

I've long said the market is salivating for a REAL GOLD Backed Crypto...

Is this one it, I don't Know...

Butt Bitcoinz better come up with its own GOLD backing or it will continue its fade and be

trampled by PHYSICAL Backed and Audited Cryptos ...

In reply to by Looney

Pinto Currency eclectic syncretist Feb 2, 2018 2:53 PM Permalink

"... Only time will tell if the Satoshi White Paper and the advent of Bitcoin in October of 2008 was simply a coincidence and perfect timing when the world was on the brink of monetary collapse, or if this anonymous publication and creation was meant to be engineered all along by the very entities that cryptocurrencies seek to overthrow.  Because this would also mean that the resignation by J.P. Morgan’s Blythe Masters in 2014 to create a new startup for blockchain technology was also a coincidence, as is the cryptocurrency engineered by the Federal Reserve to one day soon function in the capacity of global bank settlement. ..."

 

https://thedailycoin.org/2017/08/06/cryptocurrencies-the-next-level-of-…

In reply to by eclectic syncretist

inhibi eclectic syncretist Feb 2, 2018 3:01 PM Permalink

Exactly. Tell me, please, how you would back a hypothetical, volatile, sequence of bits with gold? I'm pretty sure we already went through all of this with the gold standard back in the good ole days. It limited the monetary supply and took power away from the central bank, so it was abandoned.

So I guess in this stupid version, you would need to go public with some amount of physical gold, and then promise to integrate more physical gold as the demand rises? 

Would love LOVE to see all the cryptidiots get reamed when one day they try to trade their fake 1's and 0's in for real gold, only to be told it doesnt exist...Just like gold cash.

In reply to by eclectic syncretist

Joiningupthedots 38BWD22 Feb 2, 2018 2:52 PM Permalink

Indeed.

Its a marketing excersize.

Its a gold (whatever its name) disc weighing a certain amount of grams purchased for the going rate in fiat money.

No more and no less.

How they link it to bitcoin is a bit of a mystery.

Maybe they stamp a capital B on or something ;)

In reply to by 38BWD22

Rickety Rekt 38BWD22 Feb 2, 2018 3:11 PM Permalink

Fiat is fiat, nothing else.

Gold is Gold.

They are very different.

What is our fiat backed by, nothing. What happens to banks next big crash? Bail ins, so you wake up with bonds in your account. MUCH BETTER.

This attack on crypto is coordinated. Plain as day. Market with massive run up (where did 100's of billions come from when exchanges could hardly handle volumes?). Market really starts to go south after first BTC futures come in. Did CB/gov't buy early Dec? Then sell the top letting retail hold the bag? Putting the crypto fear into everyone as we roll into a market crash. Ever stop to think that they want to prevent bank runs so they can do their bail ins? Why is it that every time the market technicals turn bullish, a different country puts an article out stating they are clamping down? Notice how crypto market sell off is so close to Davos when they generally said it was time to axe it?

All coincidence I am sure.

Either way I made stacks and have cash sitting in the account while I wait. How crypto acts on the crash will tell you everything. Would be stupid to not be set up to take advantage, regardless of what way it goes... My Au and Ag are still looking good but crypto always looked better.

-THE Rickest Rick of them All

In reply to by 38BWD22

RossDuffer Feb 2, 2018 2:40 PM Permalink

This is an absolute joke. The royal mint themselves have the ability to add the tokens to the blockchain. The whole reason fractional reserve banking started was because goldsmiths would hand out more gold certificates (in this case tokens) than they had gold in their vaults. The whole point of cryptocurrency is to make a trustless payment network which this is clearly not.

Bopper09 Feb 2, 2018 2:43 PM Permalink

Throw some gambling money at these.  DGD is backed by one gram of gold and started at around $60.  It's sitting near $400 right now.

Keep your physical, gamble with some cryptos.  

Ink Pusher Feb 2, 2018 2:44 PM Permalink

In other words ...

they've discovered and confirmed that all crypto has ZERO intrinsic value and were forced to back it with bullion.

No fucking
surprises here...

 

BigWillyStyle887 Feb 2, 2018 2:47 PM Permalink

Absolutely not. Digital gold isnt supposed to be backed by gold. Its supposed to just be gold but in the digital realm. What the world really needs it bitcoin backed gold. 

 

Am i right guys? Am i right????

tuetenueggel Feb 2, 2018 2:49 PM Permalink

Gold and Silver never needed a helping hand. They always had their intrinsic value quite opposite of all construction criminal banksters invented. Cryptoshit will vanish as it came out of nowhere.

Ink Pusher Feb 2, 2018 2:49 PM Permalink

Great ! < Sarc

The creation of more fucking NOTIONAL gold markets to manipulate physical pricing and create more false digital  collateralized debt assets.

 

 

besnook Feb 2, 2018 2:49 PM Permalink

perfect solution to remote stacking. a crypto signature to ownership of a specific bullion held in a specific place with all the rights to buy and sell said crypto anywhere at anytime. now that's crypto.

vofreason Feb 2, 2018 2:50 PM Permalink

I don't get it.  It seems you people just want to believe in nonsense.  This would be a great development.  Why is backing it in a legitimate way a joke?  It would be great if there was one agreed upon gold backed crypto!  It could serve as a currency for the third world and slowly (or quickly) make it into the mainstream and force a return to the gold standard.......what most here would want!  Can you guys ever think in a positive way about anything?!?!

affirmed_78 vofreason Feb 2, 2018 2:58 PM Permalink

There is already gold-money or something like that.  If you think about how bitcoin works, there's no trusted 3rd party.  That's the beauty of it.  With a gold-backed cryptocurrency, who monitors the gold?  Who stores it?  Who verifies the ledger or database?  Surely it wouldn't be minable like existing cryptocurrencies, where the miners verify the ledger and receive tokens as a reward.  It would be like a more easily tradable gold ETF.  

In reply to by vofreason

VWAndy Feb 2, 2018 2:51 PM Permalink

 You guys know Im not in a big old hurry to get to bartertown right? Thats where this is going to end up. Yes it will suck. 7000% inflation? Only barter can solve that folks.

quasi_verbatim Feb 2, 2018 2:53 PM Permalink

Cryptogold. Desperate times, desperate measures.

If it looks like a gold coin in the ads but it doesn't go 'clunk' and you can't spin it then I have a soiled memo to sell you -- only used once.

Madison's_Ghost Feb 2, 2018 2:58 PM Permalink

I'm a crypto guy.

 

That being said, here is my problem this - the value of the gold and the value of the crypto representing it will diverge in value - decoupling rather quickly.  The issuer has to pay to store all this gold, that subtracts value for the actual owner of the gold.  In the meantime, the ability to transact so easyin with the digital crypto actuall adds more value to the crypto.  This means that cost/price pressure will force the gold and crypto values in opposite directions - especially since they would need to add gold as fast as (actually faster, which defeats the point) the crypto is issued to keep the value of the crypto in check - an untennable position as the demand increase for the gold will necessarily lag behind that of the cypto.

Blue Steel 309 Feb 2, 2018 2:59 PM Permalink

Why do you need the extra step of crypto, if you have gold? Probably to hide the fact that a gold based currency (AKA money) can not work in a system where it can be exchanged for worthless fiat.

Pretty much why gold is at the value it is, right now.