How to Reduce Volatility
Gold-secured Crypto Assets Already on the Market
The spring of 2018 is a good time for the implementation of a reliable tool for securing the profits of traders on the cryptocurrency market. Since March, Bitcoin has dropped nearly 30%, and ETH has fallen almost 50%. Leading to a significant outflow of funds from the market. The traders, without a reliable tool for profit-taking, are increasingly forced to sell cryptocurrency and buy fiat, which inevitably leads to an even greater depreciation.
Tether (USDT), previously widely used in trading, is rapidly losing credibility with users due to the spontaneity of the issue, and the non-reinforcement of the token with real money. In addition, the company itself disavows responsibility in every possible way. The first wake-up call for cryptocurrency users was the delisting of USDT from the Tokyo Stock Exchange, and now, despite the growing capitalization, there is even less confidence in Tether.
Meanwhile, two Singapore companies Digix and GoldMint, announced the launch of new stable gold-secured crypto assets. It took two years for Digix to develop and launch gold coins. According to Digix’s white paper, a pawnshop with ValueMax Singapore is securing the token with gold, and MalcaAmit is the provider of physical storage. Value Max is a medium-sized pawnshop chain with a turnover of less than 270 million dollars for 2016; the data for 2017 wasn’t published by the company. According to statistics, the network turnover has been falling rapidly since 2014. Thus, the actual security of gold DGX remains the subject of discussions and disputes. In addition to this, the company uses only one depository for its assets, which adversely affects the confidence of investors and it’s hard to say what will happen if the partnership with MalcaAmit is ever broken.
GoldMint, in turn, brought GOLD’s digital asset to the market four months after the completion of the ICO. According to the quarterly report of GoldMint, GOLD is secured by the futures of Chicago (CME) and London (LME). SGPMX (Singapore) was chosen as the subject of the over-the-counter currency market. The storage of delivered gold, Chicago-based CME carries out in the two nearby banks of the US Federal Reserve – New York (FRBNY) and Chicago (FRBC). It’s also possible to operate with any of the four SGPMX stores in Singapore (storage facilities not only in Singapore). The choice of well-known depositories and suppliers by GoldMint, as well as their diversification, is a logical step that will certainly influence the confidence of traders and investors. Currently, GOLD assets are traded on the Bancor, Idex and Simex exchange markets. The company is also actively working to launch the personal account, where investors can buy and sell gold assets using fiat.
The appearance of gold-secured assets on the cryptocurrency market will positively affect the overall capitalization of the market by attracting traditional investors in the securities and precious metals markets. The presence of gold in the crypto industry, which for hundreds of years was considered a universal investment tool, is an important step in its development.
In comparing Digix and GoldMint, the different purposes of the company’s domestic currencies deserve to be mentioned. Digix offers its currency as a DAO tool (a decentralized autonomous organization with the right to vote and receive passive income from commissions on operations with gold assets, which was deemed illegal from the of SEC’s side on the example of THEDAO in 2017). Meanwhile, the GoldMint MNTP token acts as a tool for confirming transactions in its custom blockchain and provides holders with preferential terms for transactions with gold (reduced markup and the small commissions on transactions, up to 0.03%).
Another key difference is in the technological implementation: Digix uses the Ethereum blockchain, while GoldMint has two blockchains: Ethereum and the custom, based on Sumus blockchain, which will be launched in the second quarter of 2018.
Digix and GoldMint, similar in purpose, but still qualitatively different projects, are designed to significantly change and simplify the process of trading on the cryptocurrency market. However, only time will tell who will win the gold race for users’ confidence.