Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => Stable Coins Forum => Topic started by: Peter90 on March 21, 2024, 08:01:46 PM
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Stablecoins can be classified in 6 groups based on what kind of assets they are backed by
6 Types of Stablecoins (based on what they are backed by)
1. Stablecoins backed by fiat currencies
2. Stablecoins backed by hard currencies
3. Stablecoins backed by cryptocurrencies
4. Stablecoins backed by financial products
5. Commodity-backed Stablecoins
6. Algorithmic Stablecoins
The 6 Types of Stablecoins (https://www.altcoinstalks.com/index.php?topic=317893.0)
This thread is about #2, Stablecoins backed by hard currencies (in particular by gold)
What are gold-backed cryptocurrencies
"Gold-backed cryptocurrencies are tokens designed to represent a specific amount of physical gold holdings in a digitalized format, which also can be redeemed by the holders whenever needed.
These tokens offer a unique investment option by combining the stability of gold with the innovation of digital currencies.
The operation of gold-backed cryptos is straightforward: a designated amount of gold is securely stored, and an equivalent number of crypto tokens is issued. Transparency is crucial, with reputable issuers providing regular audits and proof of gold reserves.
Transactions with gold-backed cryptos are conducted on blockchain technology, ensuring secure, immutable records of ownership and transfers. This feature, along with lower operational costs compared to physical gold handling, makes them appealing for global investments.
Investors benefit from the ease of transferring these digital assets internationally, bypassing the complexities of physical gold logistics."
creditcoin.org (https://creditcoin.org/blog/gold-backed-cryptocurrency-companies/)
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(https://i.ibb.co/KxwFzXB/1.png)
I already opened a thread about Tether Gold (https://www.altcoinstalks.com/index.php?topic=315185.0)
The second gold-backed SC by market cap is Pax Gold
KAU (gold) and KAG (silver) are Kinesis' currencies (https://www.altcoinstalks.com/index.php?topic=129595.0)
VRO is VeraOne
It looks like these are the 4 biggest issuers of precious metals backed SC by market cap
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What is a Gold-Backed Cryptocurrency?
A gold-backed cryptocurrency is a type of digital currency where a specific amount of physical gold backs each unit. Unlike traditional cryptocurrencies such as Bitcoin, which derive their value from factors like supply and demand dynamics and speculative trading, gold-backed cryptocurrencies aim to provide stability by tying their value directly to the price of gold.
Typically, each cryptocurrency unit represents ownership or claim to a corresponding amount of gold held in reserve. This reserve is often stored in secure vaults and audited regularly to ensure transparency and trustworthiness. The value of the cryptocurrency is linked to the market price of gold, providing holders with a more stable and reliable store of value compared to other cryptocurrencies.
Gold-backed cryptocurrencies combine the benefits of blockchain technology, such as fast and secure transactions, with gold’s intrinsic value and stability, making them attractive to investors seeking a hedge against currency devaluation or economic uncertainty. They can be used for various purposes, including digital payments and remittances, and as a diversification tool in investment portfolios.
(https://i.ibb.co/GHSKDQD/1.png)
apmex.com (https://learn.apmex.com/investing-guide/what-is-a-gold-backed-cryptocurrency/#:~:text=A%20gold-backed%20cryptocurrency%20is,physical%20gold%20backs%20each%20unit)
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(https://i.ibb.co/QMyXnZv/clinq.png)
Benefits for countries and members
Gold Sovereignty
Retain control over your physical gold preventing gold drainage from Africa.
Mobile Money Payments
Integration with prevalent systems like USSD, ensuring smooth transitions and user accessibility.
Anti-Inflationary Solution
Gold-backed payments empower African country currencies, offering stability against inflation and de-dollarisation.
Taxation and Law Enforcement
Advanced features for compliance, including user identity and flexible taxation tailored to local needs.
BRICS-ready Solution
Proactive gold-backed system integration positions BRICs candidates at the forefront of financial innovation.
Cheaper and Faster Payments
Central banks control transaction costs on a network, ensuring low fees across National and International payments.
https://clinq.gold (https://clinq.gold)
White Paper (https://docs.clinq.gold/introduction)
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Why gold backed stablecoins, you ask.
We have already functioning $ backed stablecoins, right?
This is why
(https://i.ibb.co/mXk4j8k/Screenshot-2024-12-22-at-23-35-12.png)
How is it possible to call a coin stable when it loses value that way?
If 30 years ago Peter had put his wealth in a $-stablecoin today he had lost 50% of it.
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Why gold backed stablecoins, you ask.
We have already functioning $ backed stablecoins, right?
How is it possible to call a coin stable when it loses value that way?
If 30 years ago Peter had put his wealth in a $-stablecoin today he had lost 50% of it.
Well, I think the meaning of the word "stable" is not related to the purchasing power of the token, but to its peg with fiat currencies such as USD and EUR: 1 USDT = 1 USD, 1 EURT = 1 EUR.
Most investors are familiar with using fiat and determining value in fiat, so a stablecoin on a blockchain based on fiat would be more suitable for the needs of crypto investors. KAU could be an interesting idea but unfortunately, it has not been well received by investors when the daily trading volume is only about $29K, very small compared to Tether $66B volume.
I personally consider KAU as a normal RWA token, not a stablecoin, as its value is pegged to a real-world asset/commodity. Kinesis also defines KAU as "a gold-backed currency", not "a gold-backed stablecoin" ^^
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Well, I think the meaning of the word "stable" is not related to the purchasing power of the token, but to its peg with fiat currencies such as USD and EUR: 1 USDT = 1 USD, 1 EURT = 1 EUR.
Most investors are familiar with using fiat and determining value in fiat, so a stablecoin on a blockchain based on fiat would be more suitable for the needs of crypto investors. KAU could be an interesting idea but unfortunately, it has not been well received by investors when the daily trading volume is only about $29K, very small compared to Tether $66B volume.
Yeah you actually have a straight forward explanation. The idea of a stable coin is mainly concerned on pegging and in most cases the pegging is done against another asse or currency t that is measured to have a relatively lower volatility which in most cases is fiat based on its dynamic rates compared to crypto currencies in general.
Pegging most times is just like an alternative which in the case of a stable coin like USDT, you seem more to have a digital version of the dollar too instead of only the physical version.
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For me, the appeal of gold-backed stablecoins is more about diversification and long-term security. But I also get why most people stick with fiat-backed options for things like trading—they’re more widely accepted and liquid. If gold-backed stablecoins can solve those issues, I think they could become a serious contender in crypto space..
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For me, the appeal of gold-backed stablecoins is more about diversification and long-term security. But I also get why most people stick with fiat-backed options for things like trading—they’re more widely accepted and liquid. If gold-backed stablecoins can solve those issues, I think they could become a serious contender in crypto space..
Yeah you do have a point partially gold backed stable coins seem more like the old coupon to gold exchange as a form of money. I think one of the things to spot out here is actually the volatility of gold especially if you are viewing it from a very accurate scale with good spreads similar to the Forex market of metals.
Pegging these days are done on assets on currencies that have an almost negligible fluctuation in price on a general scale. That's because even usdt that's pegged to dollar is more like an approximate peg that's because the dollar too fluctuates and there is a difference in spread.