Today, investors have become more cautious while investing in cryptocurrencies and hence, choose lower-risk investment alternatives such as gold-backed stablecoins. Although the concept of gold-backed cryptocurrency development was introduced in 1996, it witnessed a spike in the market cap during the COVID-19 crisis as investors were heading to a new safe haven asset that can offer them returns in uncertain times.
According to an Arcane Research report, the market capitalization of gold-backed crypto tokens increased by 60% in 2022, surpassing $1 billion for the first time in history. The stat is evident of the huge surge in the colossal popularity of gold-backed stablecoins among investors. The growing interest of investors in gold-backed stablecoins might also direct you on the same path and lead you to invest in this digital asset. If you’re planning so, this blog is for you as here we have highlighted the benefits of this new innovation in the digital asset ecosystem in a proper way.
What is Gold-backed Stablecoin?
Gold-backed stablecoins are cryptocurrencies that attempt to peg their market value to the price of gold to make it a less volatile financial instrument. This type of digital asset can also be used as collateral for smooth peer-to-peer lending since this information would be safely and securely stored on the Blockchain. Some gold-backed stablecoin examples are Digix Gold Token (DGX), Tether Gold (XAUT), Perth Mint Gold Token (PMGT), PAX Gold (PAXG) & the Midas Touch Gold (TMTG).
What are the Benefits of Gold-backed Stablecoin?
The following points clearly highlight the motivation behind using gold-backed stablecoins than any other choice of the digital asset.
- Stable Option
The volatility affects the cryptocurrency’s performance in the market. In some cases, this volatility is beneficial, whereas in some cases, it may have adverse effects, especially when prices fall or drop straight at high speed. However, gold is a stable asset and holds a stable value. Its value doesn’t fluctuate frequently like Bitcoin. Investors find this form of digital asset safe to keep their funds as it is one of the most stable markets today. Besides, gold-backed stablecoins also allow investors to redeem their holdings anytime without facing any loss.
- Helps Make Informed Investment Decisions
Being a stable option, the price fluctuations of gold-backed stablecoins are understandable, aiding investors at the same time to make the right move. Investors need to look at the daily gold market and related trends, changes, and expert predictions to make the right investment decision. On the other hand, market variations of other crypto tokens is unstable, making it difficult for investors to understand the market.
- Liquidity and Access with Fractional Ownership
Gold-backed stablecoins offer more opportunities to utilize gold as a medium of exchange. It is a widely accepted store of value that can be accessible to buyers from all over the world. Hence, the barriers to entering the gold market are also removed with this new innovation in the crypto world. For anyone who does not have the funds, cryptocurrencies allow them to invest in fractions of a coin to stake their finances in an equivalent amount of gold in the company’s holdings. No doubt, gold-backed stablecoin development is a great alternative for liquid assets.
- Safe and Accessible
Gold-backed stablecoins are cryptocurrencies on a Blockchain. It means customers can enjoy access to their assets 24*7 through their digital devices. Apart from being accessible, it also helps investors to keep their accounts safe, by conducting several cybersecurity practices. Several gold-backed cryptocurrencies are based on the Ethereum blockchain as ERC-20 tokens as well as equipped with DeFi capabilities that open new streams of investment for token owners.
- Deflationary
The robust fiat currencies are also highly prone to inflation. However, gold is deflationary. It means it is not affected by inflation which makes it one of the ideal investment options for crypto enthusiasts or investors. The deflationary characteristic of the gold asset provides assurance of value maintenance to investors.
Final Words
The key factor that leads many to say yes to gold-backed tokens is transparency. Investors always urge for the maximum visibility to be confident that there is gold stored on highly-secure vaults. Transparency is not the only reason why investors show interest in gold-backed stablecoin.
The above-listed points show why this investment option is so popular among investors and at the same time, gaining traction with everyone worldwide. The rush for the gold-backed stablecoin has encountered a major spike in growth in recent years. If you also want to invest in the same, it’s crunch time to hire a reputed gold-backed stablecoin development company, Antier.
Antier is a reputed gold-backed stablecoin development company you can hire for your project. The company has delivered compatible asset-backed crypto development solutions to several clients across the globe. Blockchain engineers follow an agile development approach that ensures timely delivery of the project to worldwide clients.
