digital gold investment solution with little risk 2021

6 min readJan 28, 2021

How did GOLD Stablecoins appear

GOLD Stablecoin is a unit that appears as a result of a combination of two needs. Cryptocurrency pegged to the dollar is not a realistic investment tool for people like gold. While your money remains in dollars, you continue to lose value against gold and you succumb to inflation. GOLD Stablecoin is the first cryptocurrency to protect you from inflation. The value is fixed at 1 gram of gold. For every 1 gram of gold you buy, the company adds 1 gram of gold to the vault, meanwhile it also takes 1 Gold Token to the market, so 1 Gold Token always remains at the price of 1 gram of gold.

Types of Stablecoins

Researchers of BLOCKDATA have classified stablecoins in three major categories:

-Asset-backed off-chain stablecoins
-Asset-backed on-chain stablecoins
-Algorithmic stablecoins

Asset-backed off-chain stablecoins

These can further be divided into Fiat-Backed and Commodity-Backed stablecoins. It is important to mention that 95% of all existing stablecoins are Asset-Backed, both off-chain and on-chain.

Fiat-Backed stablecoins are backed by fiat currencies such as the USD. The most popular examples of these are Tether or USD Coin.

Commodity-Backed stablecoins are backed by real assets, like gold. The most popular examples of these are Digix and Digital Gold.

Asset-backed on-chain stablecoins

The second type of stablecoins are the so-called asset-backed currencies. These are stablecoins that are not backed in fiat or real assets, but other cryptocurrencies. Multi-collateral DAI is probably the most used type of asset-backed on-chain stablecoin. DAI is backed by Ether.

More than 50% of all active stablecoins today are built on the Ethereum blockchain. Ethereum provides the most popular Dapps platform where it is easy to integrate new projects, confirmation times are fast, and transaction fees are low.

Algorithmic stablecoins

Algorithmic stablecoins use a combination of algorithms and smart contracts to maintain a stable price. Ampleforth is probably the most popular member of this category.

stablecoins were created to solve the problem of volatility. Bitcoin is not a widely accepted payment method and is happy to be seen by traders because of its volatility. Prices can drop at any time and you suddenly find that the value you receive for the goods sold is now down 10% in just one day. To avoid all of this, merchants can request payments to be sent in popular stablecoins, and rest assured that the assets they receive are worth $ 100 today, but will also be worth $ 100 tomorrow.

Why is Gold Important?

Gold has been the most important method of protecting people’s assets from inflation or various concerns for thousands of years. Since gold is a metal that does not rust and is not affected by other effects, this feature has placed it ahead of all other important metals. Although it has gained value in other metals such as silver over time, silver loses most of these features after blackening. In short, it is the number one tool hidden under the pillow in our country and protecting people’s assets throughout human history. Although a country’s currency can lose value very quickly compared to the general state of the country, the value of gold has continued to increase throughout history

The Digital Gold project started its operations in May 2019. A few weeks later the Digital Gold Marketplace was launched that allows instant trading of Bitcoin and Ethereum for GOLD tokens and vice-versa. Trading on the official marketplace bears no additional transaction fees, unlike with traditional cryptocurrency exchanges.

Over $300,000 worth of gold bullion was purchased and stored at BullionStar’s official vaults soon after. The matching GOLD tokens provide needed liquidity for the Digital Gold Marketplace.

In November 2019, Digital Gold issued a statement confirming that additional 2,000 Grams of GOLD tokens were added to the overall supply. In contrast to many other startups and ICOs, Digital Gold never had a fundraising campaign. The platform operations, exchange listings, and marketing was fully financed by project developers and owners.

The Live Audit Report shows that Digital Gold currently owns 9,197 grams of gold and 9,200 GOLD tokens, worth approximately $470,000. Live audits are publicly available information and the data can be accessed here: https://www.bullionstar.com/myaccount/audit

To learn how to navigate the Bullionstar website and gain access to the Live Audit reports, please take a look at the following article.

The Digital Gold project has an-ongoing bounty campaign worth $200,000 with various interesting campaigns that users can participate in. More information about the campaign is available here: https://bitcointalk.org/index.php?topic=5164058

Security

Compared to private physical storage of gold in your home, which is not insured, all gold stored in Bullionstar vaults is 100% insured at all times. The insurance company provides replacement guarantees at full value.

Liquidity

Digital Gold guarantees liquidity of GOLD tokens. Agreements are in place with digital currency exchanges where the tokens are listed on and the company purchases these tokens off of exchanges and the company marketplace.

Privacy

Physical purchases of gold require extensive verification procedures and identity verification. Not to mention the issues associated with storing the gold in its physical form. The purchase and sale of gold via the official marketplace are 100% anonymous. After a few clicks of a button, your new GOLD tokens are deposited to an address of your choice. No regulatory requirements, no identity verification

Value is based on speculation

Many cryptocurrencies are purely based on speculation. They have no working product and their use case and effectiveness is yet to be proven. Chances are that in a year or two many coins will completely die out once the users realize that there is no reason for them to be around, and there is no benefit in using their native token compared to other available coins in the industry. https://deadcoins.com/ is a graveyard of crypto projects that are no longer active. Its database shows almost 2,000 dead projects.

Merchant risk

The biggest risk is, as stated before, the volatility factor. Other risks are associated with proper storing and safekeeping of cryptocurrencies and the reliance on third party wallets and exchanges to provide the service they said they would.

Network fees

In case of sudden price spikes transaction fees will also go up. This happens because miners are motivated by the rewards they receive. More transactions equal bigger rewards, but this also results in slower processing times and longer periods of waiting for transaction confirmations.