Content adapted from this Zerohedge.com article : Source
Authored by Mike Shedlock via TheMaven.net/MishTalk,
Even before the emergence of the growing plethora of cryptocurrencies, several attempts had been made in the past to create digital currencies based on gold, but none of them gained widespread support. Will blockchain and Bitcoin succeed where other attempts failed?
One of the common criticisms and challenges of bitcoin and other cryptocurrencies is their price volatility which renders their consideration as a store of value nearly impossible. Some believe that gold backed cryptocurrencies may hold the key to solve these key challenges.
There are already several cryptocurrencies, otherwise known as altcoins, backed by gold that have been launched. Several of the leading online bullion exchanges have implemented or are also implementing blockchain to create more efficient mechanisms for managing transactions. Each month it seems like there are more and more players joining the fray.
My friends at The Hutch Report have provided me with an analysis of this nascent gold backed cryptocurrency niche along with a review of some the various players in the space. There are already some obvious differences across platforms which will most likely serve to weed out the serious players from those looking to make a quick buck.
This analysis provides an objective review of the strengths, weaknesses, opportunities, and threats as well as a look at 23 gold-backed crypto and digital currencies. A review of some of the exchanges is also thrown in for good measure.
Those Interested in more detail you can download the full report on Gold Backed Cryptocurrency. If you are looking for either a "To the moon, Alice" kind of report, or "This bubble will crash" kind of report, you are likely to be disappointed. Rather, this report analyses the increasing number of cryptocurrencies being backed by gold bullion. Included are research and analysis on 23 different companies and 4 gold exchanges using the blockchain. Here is their conclusion.
Hutch View
The recent economic and financial crisis of 2007-2008, not to mention the savings and loan crisis years before, woke people up to the fact that their banking and savings accounts may not be as secure as they once thought. In addition, people have begun to realize that the purchasing power of their fiat currency savings have been eroding over time as working families are fmding it harder and harder to get through the month.
Massive central bank intervention into our free markets has not only caused more worry about potential runaway inflation, which would cause fiat currencies to be devalued and further losses of purchasing power, but their actions have caused an ever increasing wealth gap between the rich and the poor. It is clear that fiat money has serious economic and ethical drawbacks. This has prompted a search for a better alternative.
The marriage of cryptocurrencies and gold enables alternative choices to holding more than fiat currency. Although we can't imagine fiat currencies to be replaced overnight, the promises of gold backed cryptos do look compelling moving into the future and they are certainly important to follow.
In spite of the strengths of a gold backed cryptocurrency there are still many unknowns.In their short history we already have some that have come and gone. Our research into many of the up and coming gold backed cryptocurrencies has shown that the information available is not completely clear or transparent and sometimes sketchy at best. Previous examples of blatant fraud is also a reason to be defensive but not dismissive of the newcomers. We also have a variety from different parts of the globe. There is not enough of a track record with which to have the confidence to make a significant investment although it is worthwhile to look at them from a short term trading aspect in order to see how well they function and if they are able to deliver on their promises.
The principle strengths of the gold exchanges based on the blockchain is that they are being developed by reputable organizations. We don't lose site of the fact that these blockchains being used are centralized which means they don't incorporate many of the advantages of the decentralized model for which cryptocurrencies such as Bitcoin have become known. They are not yet fully operational therefore it is difficult to judge their efficiencies.
Although these new gold backed cryptocurrency and blockchain gold exchanges provide a compelling alternative to the purchase of gold we would not be jumping in just yet, however the future looks very exciting and by understanding the current developments in the sector through this report you are provided with a greater advantage as they mature.
The ventures with the strongest management teams look to be the most compelling. For this reason the exchanges; Bankchain Precious Metals, Goldmoney, The Royal Mint and Tradewind, look solid. Among the gold backed cryptocurrencies, we will be following the launch of BullionCoin.
Mish View
If you want to hold gold, hold gold. But if you are still itching to get into cryptocurrencies despite (or because of) the massive crypto-rally, then gold backed crypto may be the way to go.
There are several gold backed cryptoassets: Xaurum, OneGram, GoldMint, Open Gold, Digix Gold etc
Goldmint & OneGram are just about to complete their ICOs.
BullionCoin has gone silent since the supposed launch.
The only tradable at the moment are Xaurum on Bittrex (passed compliace test) and OpenGold on Bitshares.
If you don't hold it you don't own it in my opinion. I wouldn't let a banker control my Bitcoin or gold.
The instability of crypts, the use of fiat money that does not have gold coverage, does not have the security of the value of Bitcoin and other currencies.
We know that Nixon's predecessor, with two laws (from 1971 and 1974) made a fiat of money, a gold-free dollar, in this way they could print money without cover and deflation suppress inflation. This has led to the rich being richer, and that the middle layer of people becomes even poorer.
The value of a particular currency depends on its use. The US dollar is the first reserve currency in the world if Argentina were to give its dollar the first reserve currency in the world, then Argentina was a rich country.
Now the bitcoin is the first crypt of the world, everyone is trying to replace Bitcoin, insert their currencies and get rich. Stability of gold is not a perfect guarantee, I think they want to introduce a new dimension, especially those dealing with gold.Bitcoin has about 31 million users, its value grows because more and more people want to have it and work with it. If you take the benchmark that the value grows from demand, then you will see that Bitcoin itself and its investment in it is much more valuable and profitable than just gold.
We have two fiat money in use, one is paper and the other is revolutionary with the new blockchain technology that represents the future in data exchange, the speed of protocols and the way new industries work in the future.Bitcoin himself became the gold of the modern era. Excellent post @zer0hedge
thank you friends have provided information that is very useful.
Upvote and resteem.
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He speaks the truth!
I like peanut butter and chocolate, but if I could I'd change them for Blockchain And Gold!
Good article @zer0hedge
It's worth reading this post about Hashgraph potentially making Blockchain obsolete https://steemit.com/bitcoin/@tommytwohats/has-bitcoin-been-surpassed-by-hashgraph
Gold went from $1900 to $1200 in, what, 6 months. That is a 33% loss. Not exactly totally stable.
That aside, gold is going to have less importance going forward. We are moving more into a digital world. Physical assets are going to have less value than digital ones. We already see that with the largest corporations. Companies like Google and Facebook own relatively little compared to Gm or XOM yet are worth more. Why is that? Because the digital assets they own, are move valuable than plants and raw materials.
Take something like art. The blockchain is showing how something like a painting wont have the value, but rather the key that accesses that place of the blockchain that the painting was registered. Without that key, the painting is going to be worthless.
Really informative
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