Gold-backed cryptocurrencies have a massive potential to become the most reliable, viable and adopted stable coins. Unlike Bitcoin and most Altcoins, gold has many use-cases. It is used for coinage, art, and jewellery. For electronics and even medicine. It is the secret reserve currency of the world. As all major banks and most major states hoard a significant amount of gold. It is the true store of value. Proven throughout the history of our civilization and was used for thousands of years as a means of payment and exchange. Long before Fiat money was invented or implemented.
Though, gold is not used as money anymore due to its physical properties. However, the combination of cryptocurrencies and gold brings together speed, transportability and protection from fraud with gold’s excellent store of value property. So why are gold coins, so far, rather neglected and resemble more orphan coins than legitimate cryptocurrencies? Why are gold coins not more adopted although gold has excellent store of value qualities?
Gold – a conservative asset for conservative investors
An old wisdom of stock market traders says that gold belongs into every well-balanced portfolio. It is a store of value and that is especially true when there is a stock market crash or a major recession. While the majority of assets is likely to use value during these times, gold will likely rise. A rare and valuable property of an asset. But people who like gold will likely not like volatile and risky assets like cryptocurrencies. It probably does seem like an unnecessary hype if you think [
if you do not see any fundamental issues within our monetary system. Why trust some unestablished institution with your gold investment, if you can buy gold physically or buy derivatives from established institutions?
Why the crypto space does not invest in crypto-gold
Let’s be honest, what is so binding and fascinating about digital money right now are of course the major returns that they delivered over the last few years. It’s not the tech for most of us. Paypal and other payment services are fast enough. And if a few seconds or a few minutes are decisively important for you, you should probably reconsider your lifestyle. So for the most of us there is no real reason to invest into cryptocurrencies. But major returns. And gold does not deliver these returns. Therefore, it is just simply a dull and a no-major-returns investment. A store of value maybe but that is not what the majority in the crypto space is really looking for.
Still early phase of adoption
Many people hope that with mass adoption, prices will be stable enough to maintain a low volatility in crypto prices. It would be of course the ideal solution to the problem that we are facing right now. Which is that many people do not trust cryptocurrencies as a means of payment. In fact, our own desire to profit from cryptocurrencies is destructive to the vision of having a viable and reliable alternative to fiat money. It is a long road to mass adoption. Why should we not count on gold-backed crypto at least for the transition phase? Gold maintains its value compared to Fiat and of course cryptocurrencies. No matter what happens to the blockchain, no matter if we find solutions for our scaling issues. If we want to further trust into crypto, we should give gold-backed cryptocurrenies a chance.