Since the advent of bitcoin in 2009, cryptocurrencies have been always criticized for not having a physical backing. Also, the lack of a central authority controlling issuance and supply has rendered the value of cryptocurrencies questionable by financial experts. Add to all of this the high volatility levels of cryptos which is one of the main obstacles hindering mass adoption of cryptocurrencies.
To mitigate these challenges, the concept of gold-backed cryptocurrency has emerged. These currencies operate in a similar fashion to traditional cryptocurrencies, except that they are backed by tangible gold, via allocated or unallocated gold storage. Stablecoins are a form of asset backed cryptocurrency which was developed to address crypto's extreme price swings. A stablecoin is a cryptocurrency whose value is "pegged" to assets with stable value including fiat currencies (e.g. USD, EUR, etc) and precious metals. Gold-backed cryptocurrencies are special forms of stablecoins, the value of which are pegged to that of gold. Combining the innovative capabilities of the blockchain technology with gold offers a convenient solution to the highly volatile cryptocurrency market.
Gold-backed cryptocurrency list
The list of gold-backed currency has been growing steadily, with new crypto gold options launched almost every day. At the time of writing of this article, the list includes the following:
AgAu is a cryptocurrency that gets its name from the chemical symbols for gold (Au) and silver (Ag). There are two forms of AgAu: the AgAu Gold token whose value is equal to the price of 1 gram of LBMA gold, and the AgAu Silver token whose value is equal to the price of 1 gram of LBMA silver.
Airgead coin enables a user to merge the value of different precious metals, including gold, silver, platinum, and palladium, into one coin. The value of each Airgead coin is based on the type and mass of precious metal assets backing it up.
Anthem Gold (AGLD)
Anthem Gold (AGLD) is a cryptocurrency that has been launched by Anthem Vault Inc. Each AGLD coin is backed by one gram of tangible gold. The gold backing the currency is fully insured and vaulted securely via a nonbank operator.
AssetBase has five different cryptocurrencies pegged to different precious metals (gold, platinum, silver, palladium, and rhodium). AssetBase has a separate coin for each metal. The GoldBase coin (ABG) is a gold cryptocurrency backed by 1 gram of physical gold which is 100% redeemable upon request. All the precious metals backing the coins are stored and insured by a third party.
Each AU coin is backed by 0.75 gram of tangible gold. However, the par value of the coin will always be equal to 1 gram of tangible gold. The physical gold backing of the coin is securely vaulted in London, Zurich, New York, Singapore, Toronto, and Hong Kong.
AurusGold (AWG) is a software startup that offers established gold traders a tokenization service. Each AWG coin is represented by 1 gram of 99.99% LBMA approved gold. AurusGold's team has created a coin backed by tangible gold whose insurance and storage is paid for fairly via the currency's transaction fees. AWG is 100% backed by physical gold that can be withdrawn at any time.
BullionCoin is a currency backed by gold and silver. There are two forms of BullionCoin: XAAU which represents 1 gram of 999.9% gold, and XAAG which represents 50 grams of 99.5% silver. Users can issue a debit MasterCard which can be loaded with BullionCoin and used anywhere for online and offline purchases.
Currensee (CUR) is a gold-backed cryptocurrency pegged to the price of 1 gram of gold. CUR is built on its very own blockchain that relies on the principles of Ethereum's blockchain.
Each CYRO token is guaranteed by one Cyronium coin. Each Cyronium coin is backed by 20 grams of LBMA gold. The company offers users a gold coin exchange with the option to replace their CYRO tokens with physical coins. If you choose to possess the physical coin, your corresponding CYRO tokens will be destroyed by the smart contract to prevent duplication. The physical coin will be shipped to your address along with an ownership certificate. The gold backing the currency is vaulted in Singapore.
Darico is a cryptocurrency backed by gold, ethereum, and bitcoin. Each DEC token is backed by 35% gold, 55% bitcoin, and 10% ether. Holders of DEC can trade their tokens along with other cryptocurrencies at the Darico Exchange. The physical gold backing up the currency is secured in custodial vaults. Users can order a Darico debit card that can be loaded with the DEC tokens.
DigixGlobal (DGX and DGD)
DigixGlobal has two Ethereum based tokens: Digix Gold Token (DGX) which is pegged to the price of 1 gram of 99.99% LMBA gold securely stored in Safehouse Vaults, and Digix DAO Tokens (DGD) which are used to reward users quarterly on the basis of the total DGX transaction fees collected.
DinarDirham is a decentralized gold trading platform that combines the stability of the price of gold with the security of the blockchain technology. DinarDirham features three products: DinarCoin, Gold Smart Contract (GSC), and DinarDirham physical gold. DinarCoin is the platform's cryptocurrency issued on Ethereum's blockchain. DinarCoin's value is equal to a gold spot contract (XAU) offered by the company's forex liquidity provider. Each DinarCoin is backed by physical gold. Gold Smart Contract (GSC) has five types: Gold 1 Gram, Gold 100 Gram, Gold 1 Kg, Silver 100 Oz, and Silver 1Kg. GSC can be bought on DinarDirham's platform or via DinarDirham's partnering bullion providers. DinarDirham Physical Gold can be bought at gold's spot price via DinarDirham's platform.
Doradcoin is a gold-backed cryptocurrency that has been launched to support a gold mining company based in Chile. At the time of publishing this article, the company does not provide the gold's relation to the value of the coin or the location of storage of the physical gold backing the currency.
Egold (unrelated to E-gold) operates on a blockchain ledger and works via a tokenized asset whose value is pegged to physical gold. Egold has its very own blockchain and altcoin, known as EGD, for GOLD transactions.
Flashmoni (OZG OZT)
Flashmoni has two gold-backed cryptocurrencies: OZG is a token pegged to 24 karat gold which is vaulted in Dubai's DMCC Free Zone and in Singapore. Each OZG token has a value of 0.065 gram of gold. OZT is another gold pegged token whose value is equal to 1/20th of that of OZG.
In addition to the gold-backed tokens, Flashmoni offers payment solutions and smart contract based advertising solutions. Moreover, the company is planning to raise funds to improve the working conditions of workers in gold mines.
Gold Bits Coin (GBC)
Gold Bits Coin (GBC) is 15% backed by physical gold. GBC is an Ethereum based ERC20 token. Users who pay for their purchases via GBC will receive discounts from partnering merchants.
Each G Coin token is backed by one gram of conflict-free gold which is stored in an approved vault. The blockchain technology is used to track gold from mine to vault, then tokenize it into G Coins.
GoldCrypto (AUX) is backed by physical gold. Each 750 tokens are backed by one oz of gold, so each AUX token will be valued around $1.70.
GoldMineCoin (GMC) is a cryptocurrency backed by a real gold mine. GMC coins are backed by gold vaulted in the Magadan region in the Russian Federation.
GoldMint (MNTP) is a coin based on a separate blockchain that relies on the Graphene technology. MNTP is pegged to gold and/or exchange traded funds (ETFs). The platform's website does not mention where the physical gold backing the currency is stored, or the amount of gold pegged to each coin.
Canamex's GOLDUSA security token offering (STO) offered investors a chance to purchase gold-backed security tokens at a 30% discount, however, it is difficult to find any current information about GOLDUSA on their site and they appear to have shifted focus to their SILVERUSA STO, which proposes a silver-backed security token.
Goldx is HelloGold's token which is backed by 1 gram of physical gold. The gold backing the currency is secured in a Singapore based partnering vault. The currency is compliant with the Islamic Shari'a standardized by the World Gold Council.
IC3 Cubes (IC3)
IC3 Cubes (IC3) is a cryptocurrency backed by 100% Canadian gold. The site is currently offline and the fate of the currency is unknown.
KCG token is a gold-backed cryptocurrency that is pegged to 1 gram of 99.99% LBMA gold that is securely stored in Safehouse Vaults. Karatcoin's platform also offers trading of gold certificates and the exchange of Karatcoin tokens via gold cards.
Each OneGram (OGC) coin is backed by 1 gram of physical gold which is securely stored in vaults located in a high security compound in Dubai's airport. OneGram is compliant with Islamic Shari'a. The maximum number of issued OGC coins is 12,400,786, but the unsold coins will be destroyed by the smart contract after the ICO is completed successfully.
Each Orocrypt (OCG) token is backed by 30 grams of LBMA gold which is securely vaulted in Switzerland, Liechtenstein, and The Cayman Islands.
Each 100 OZcoinGold (OzGLD) coins are backed by 1 ounce of 24 karat gold, 1/3 of which is stored in Perth Mint in Australia, and 2/3 is held by Ozcoin Inc. OzGLD is based on Ethereum's blockchain technology. Ozcoin Inc. claims that the currency is backed by 100,000 ounces of pure gold owned by the company.
Pecunio (PGX) is a gold-backed cryptocurrency and a crypto exchange. Each PGX coin is backed by 1 gram of 999.9% LBMA gold.
Puregold (PGT and PGG)
Puregold is a payment gateway based on a gold-backed cryptocurrency. The company offers two coins: PGT which is used for transactions, and PGG which is a cryptographic token backed by physical gold. The price of a single PGG token is equal to the cost of 1 gram of gold plus a 5% commission for fiat. The difference between the price of PGG and the price of gold will be no more than 4%.
Reales RLS is a cryptocurrency backed by silver and gold, and cryptocurrencies. Each RLS token is backed by physical gold (10%), physical silver (35%), bitcoin (20%), and a mix of ICO coins and altcoins (20%). The remaining 15% is backed by the company's budget and the platform's operational cost.
Royal Mint Gold (RMG)
Royal Mint Gold (RMG) is a cryptocurrency backed by gold reserves in the UK-based Royal Mint vault. Prova is the open source blockchain used for RMG's transactions, and its code was developed by BitGo.
Sudan Gold Coin (SGC)
Sudan Gold Coin (SGC) is a cryptocurrency backed by a gold mining business that is located in the Northern State of Sudan. Sudan Gold Coin’s value is pegged to the price of 0.05 gram of gold. 100% of the Sudanese mining company is controlled by the Dubai SG Mining Co.
The Midas Touch Gold (TMTG)
The Midas Touch Gold is comprised of three components: TMTG tokens, MDG tokens, and a cryptocurrency exchange named Digital Gold Exchange (DGE). TMTG coins represent means for purchasing cryptocurrencies on DGE. MDG token is a gold-backed cryptocurrency which is pegged to the value of 1 gram of gold.
USDVault (USDV) is a stablecoin which is pegged to the USD. Each USDV is worth $1. USDV is fully backed by gold which is secured in Swiss based vaults managed by third party facilities.
X8currency (X8C) is a stablecoin issued on Ethereum's blockchain. X8C is backed by gold and eight fiat currencies. The percentage of gold and each currency is unclear. The currency's gold reserves are stored in Zug, Switzerland.
Xaurum (XAUR) is a gold-backed cryptocurrency. The total amount of gold that backs the coin is referred to as the Xaurum CommonWealth. Each XAUR coin has the value of 1 gram of 99.99% pure gold. Users can exchange their XAUR coins for real physical gold, which can be delivered to any destination in the world.
XGold Coin (XGC)
XGold Coin offers two forms of gold-backed cryptocurrency: XGC is equal to the price of 1 gram of LBMA gold, and xBit (XBC) which is equal to the price of 8 milligram of LBMA gold. The company behind xGold has investments in real physical gold production mines in various parts of the world.
Each ZenGold (ZGC) coin is backed by 1 gram of 99.99% gold which is securely stored in the Shanghai Gold Exchange Vault.
Buying Gold-Backed Cryptocurrency
Gold has always been a popular investment, especially in times of uncertainty. Some investors also choose to buy fiat from gold backed currency countries, such as investing in the gold-backed yuan. Because a gold-standard currency generally has a reliable value, these have been seen as solid investments in the past. Digital gold currency can be seen as a new world currency backed in gold. Not tied to a single nation, it instead represents the borderless frontier of the internet.
When considering whether to buy gold coins or invest in gold coin cryptocurrency, consider a few facts. Are you already comfortable with cryptocurrency? Do you feel confident in your ability to choose a trustworthy gold-backed cryptocurrency? If not, you may prefer to stick with an investment real world gold coin, cryptocurrency may not be for you.
However, if you are already versed in cryptocurrency and are looking to diversify your portfolio with a new gold backed currency, gold coin trading may be for you. Using a trusted crypto exchange to buy gold with bitcoin may make more sense to you than converting your BTC or bitcoin gold coin into fiat and then figuring out where to buy gold coins.
Before investing in gold-backed cryptocurrency, ask yourself, “Is this gold coin worth what they say it is?” Familiarize yourself with the value of gold, so you know if a gold coin price is based on actual market value. If the price is too far above or below the gold standard price, you are likely looking at a scam.
Gold-backed cryptocurrencies seem to be one of the most popular options for stablecoins, and we suspect we'll see more join the market in 2019. As with any crypto investment, we urge you to do your due diligence on these coins before you consider purchasing them.