Ariel Shapira, serial entrepreneur from Israel, writes monthly about crypto tech. He discusses emerging technologies in the crypto, Decentralized Finance (DeFi), and blockchain space as well as their role in shaping the economy for the 21st Century.
The crypto market is currently in a downwards spiral with Bitcoin (BTC), plunging more than 50% below its peak. Terra’s LUNA plunged 99% in a dramatic slump that is now the talk of the media. The Economic Times described it as a “massacre by Terra investors” that was completed in 48 hours.
While it is impossible to predict how deep the plunge will go, investors do not have to lose their investments. They can hedge against the downturn by using tokens that are backed up with real assets.
Related: Stablecoins must reflect on and grow in order to live up their names
Gold has been a profitable investment for many years. It has remained stable no matter what market conditions and has remained a reliable asset. Despite economic turmoil, gold is expected to continue its upward trend throughout the year. Tokenization has given gold a new look and is now offering crypto-world security. These are some gold-backed projects which offer investors stability even though it isn’t on the market in the general crypto market.
VNX is Europe’s first regulatory platform to invest in tokenized precious metals. VNX Gold (VNXAU) was recently launched. It is based on Ethereum. Each VNXAU is a stake in a physical bullion of gold certified by the London Bullion Market Association, giving investors maximum security.
VNX Gold gives investors the benefits of the underlying commodity and the flexibility of a cryptocurrency asset. Each VNX Gold token has a unique serial number that is stamped on the respective gold bars. These bars are stored in a vault located in Liechtenstein. Investors can keep their gold digitally in their crypto wallet, without worrying about physical storage.
VNX Gold owners can choose to redeem their physical Gold, either in person or via delivery to their home. Investors can rest assured knowing where their gold is and how secure it is with VNX Gold.
Paxos is a regulated blockchain infrastructure platform that offers PAXG, which is a digital token backed with physical gold. Each token is one troy ounce of a single 400 ounce LBMA Good Delivery standard gold bar. PAXG owners not only own the token but also the physical gold that Paxos Trust Company keeps in vaults.
Paxos has a national-ranking auditor verify the matching supply PAXG tokens with their underlying gold monthly to confirm that the tokens are adequately backed. PAXG is now an attractive option for investors who want to buy gold in small amounts. The company has recently reduced the minimum purchase amount and eliminated custody fees.
Meld Gold, an Australian startup, is a departure from the usual gold-backed tokens. Instead of a central issuer holding physical gold, Meld Gold uses a different approach. Each token represents one gram of gold, which is held by different companies in the supply chain, including Melbourne Mint (a prominent Australian bullion retailer), for ultimate decentralization. Before any entity is accepted into the network, Meld vets them all. AJ Milne, general manager of Meld Gold believes there won’t be a central point of failure if no single entity holds all the issued gold.
The MeldGold token does not have a fixed supply. Instead, the market supply and demand for traditional and digital gold will determine its minting or burning.
GoldCoin (GLC), a diverse group of IT and finance experts, was founded in 2010 by a number of people with different backgrounds. The goal is to make gold more accessible and less expensive. GLC is the first fractionalized token that can be purchased using any cryptocurrency or national currency.
Investors can instantly purchase gold with the ERC-20 gold-backed currency. GLC’s fractionalized nature allows holders to have complete economic control and the freedom to buy any amount of gold at any moment.
GLC can be purchased and held on the GoldCoin Wallet by investors without any transaction fees. GLC is the fastest transaction of all gold-pegged tokens, with just two minutes confirmation.
Tether Gold (XAUt), a digital asset, is offered by TG Commodities Limited. One full XAUt token is one troy ounce (or fine troy) of gold in a LBMA Good Delivery Standard bar. Holders of XAUt tokens can transfer it easily between any on-chain addresses using a Tether wallet from which it was issued. Investors can find their gold bar and how many gold ounces they have by entering their Ethereum address using their XAUt tokens at the Tether website.
An investor must purchase at least 50 XAUt (or 50 fine troy-ounces) to be eligible for investment, which is approximately $90,000. Investors can split their token to redeem it for physical or financial gold. To redeem any amount, investors must have one bar of gold. Investors who want to keep a smaller amount but can still redeem it easily may face this problem.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Ariel Shapira, father, entrepreneur and speaker, is the founder and CEO at Social-Wisdom. This consulting agency assists Israeli startups in establishing connections with international markets.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.