The funny thing about money is it has no value itself. Money, or currency, gives people the ability to exchange it for something of value. The US dollar was originally a paper representation of a share of the US gold reserves. Now, instead of carrying around paper money and coins in your pocket, they put money straight in your bank account and gave you a card. And since 1971, the US dollar is no longer backed by gold. It is essentially just a piece of paper, backed by faith in the US government.
There are currently no government issued currencies that are 100% backed by gold or any other valuable material. These currencies have a value because we have all agreed that they have a value. If for some reason we all decide that our national currency is worthless, it will actually become worthless.
If you’re one of the many who wants a currency backed by precious metals, the emerging token assetization market is creating digital tokens that represent shares of gold, silver, palladium, and other metals, held in different mining reserves and private vaults. What if you could even trade your Bitcoins for gold? It’s now possible. But before that, we have to say ‘Caveat emptor,’ or let the buyer beware. Seriously.
There are a tremendous amount of scams, claiming their token is backed by gold reserves, saying each coin is worth one (1) gram of gold (currently worth $39.87 USD as of July 16th, 2018), yet the coin may actually be available on crypto exchanges for less than $0.10 cents USD. If you buy a bunch of coins and ask to trade it in for actual gold, do you think you’ll get that gold in the mail? Doubtful.
Another thing to beware of is that many of these ICOs are actually for gold mining companies. You get an equity share of the company while they mine for actual gold. However, there are no promises of actually finding any. These ICOs can be repeated indefinitely by the same people, suckering people who are hoping for a huge payout that never comes.
There is a list of gold-backed tokens that have become legitimate enough to make it onto coinmarketcap.com. There are, however, dozens of others out there, which are in ICO, pre-ICO, or are too small to have made any waves in the market.
Again, we are not endorsing the following projects and you must do your research before investing in any ICO or cryptocurrency. It is not recommended to deal with any token-based asset company who hasn’t at least made it this far. When dealing in precious metals and large sums of money, it is not enough to just say they are legitimate, they need to actually prove it.
At the time of writing (July 16th, 2018) price of one (1) gram of gold: $39.87
AurumCoin (AU) - http://www.aurumcoin.com - 1 AU = 1 gram of gold. According to their website, they were originally trying to fund their company on IndieGoGo, but the platform paused their campaign. Their current value is $31.69 (as of writing), which is somewhat in the neighborhood of a gram of gold. They claim to have been around (and Coinmarketcap agrees) since 2014, but their coin never hit $1 in value until late 2017.
DigixGlobal (DGX) - https://digix.global - Digix DGX = 1 gram of gold. Each coin is currently valued at $41.51, a little higher than the price of gold today. Their company equity stake token (DGD), is a top 100 coin on CoinMarketCap, currently ranked 56 at a price of $96.93. Their website mentions a laundry list of partners and media attention, suggesting this coin is legitimate and useful, beyond just its gold share backing.
GoldMint (MNTP) - https://www.goldmint.io - According to GoldMint’s website, they represent two tokens, GOLD and MMTP. The MNTP token only verifies transactions, and does not represent anything related to gold. As mentioned, there is supposed to be another coin with the ticker GOLD, traded on the Bancor exchange, but there is no mention of it there, or on CoinMarketCap for that matter. It is supposed to represent 1 ounce of gold per GOLD coin. According to the road map, GoldMint is launching its own blockchain around Q3 this year, and it looks like this must happen first before the GOLD coin is released.
HelloGold (HGT) - https://www.hellogold.org - The HGT token actually serves no purpose, according their whitepaper. It holds no equity, has no function or utility, and serves only as an intermediary between their other token, the GBT, which is supposed to represent 1 gram of gold per 1 coin. Their ICO is not scheduled to be finished until after the 3rd round of sales, which concludes in 2019. There is a lot of thought put into this project, but it’s too early to say how they will action these thoughts.
Xaurum (XAUR) - https://www.xaurum.org - By far the most legitimate looking gold-backed currency, they have gone to great lengths to prove their legitimacy, including a third party audit, and boasting big name partners and media outlets. The XAUR token is backed by gold, but the amount varies. It has complex tokenomics in place, designed to increase the value of XAUR over time, as it burns 0.5 XAUR with every transaction. The only off-putting thing about XAUR is the fact that you never know how much gold your XAUR is actually worth at any given time. The price of XAUR is currently $0.039 USD and can be found on a couple medium-sized crypto exchanges. Xaurum is the only project on this list that actually promises to send you the gold your coins are worth when you want to cash out. Again, we look forward to see the reality.
GoldBlocks (GB) - https://info.mygoldblocks.com - An incomplete website reveals little information about this coin, but through digging up their old website, located at https://mygoldblocks.com/invite/cryptodesign we see there are several packages available to buy. It appears they are a crypto mining company, and may have nothing to do with being backed by gold at all. The lack of information about the coin and the project is a clear sign to be extremely cautious.
Dignity (DIG) - https://cryptobontix.com – Dignity is supposed to be a family of tokens, with each one representing a different type of precious metal. These tokens were supposed to be out in February this year (2018), but while DIG shows up on CoinMarketCap, there is no information on what it actually does or represents. It is also linked to a company called ArbiTrade whose website says “Coming Soon”. What little information could be found states that each coin is supposed to represent $1 worth of gold. The DIG token is currently trading at $0.09 cents USD. Again, the lack of information could be a sign to tread with care.
As you can see, the validity, liquidity, and legitimacy of gold-backed cryptocoins is varied, but mainly on the side of questionable. Xaurum looks to be the most real and well thought out of all the gold-backed coins on this list, but as always, do your own due diligence and research before investing.