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Conventional cryptocurrencies have had a fair share of criticism, such as Bitcoin. Their main drawbacks include lack of physical support and reliance on peer-to-peer device transfers. Since no one can see the money, the legitimacy of cryptocurrencies has long been in doubt by critics. The asset-backed cryptocurrencies idea originated as a solution.
If it’s your first time learning about asset-backed cryptocurrencies, there are digital currencies that are linked to the value of physical assets like real estate, oil, energy, minerals and even precious metals like gold.
What are gold-backed cryptocurrencies?
Gold-backed cryptocurrencies are digital currencies tied to gold. It means that while the crypto coins are on a distributed ledger and therefore easy to exchange, they also have something intrinsic value that is missing in conventional cryptocurrencies.
How do gold-backed cryptocurrencies work?
The basic concept of the gold-backed cryptocurrencies is certainly convincing. A digital token that represents a certain value of gold is released. A token X coin, for example, represents the worth of one gram of gold.
A reliable third party stores the gold to which the token is hinged. Certain token-holders may exchange the gold.
The value of the gold-backed token shall be equal to the prevalent rate of gold at any given time. That means it will still be priced at the current gold price should the token fail to take off. When the token gains popularity, on the other hand, its value will grow above that of gold.
Difference between gold-backed cryptos and other cryptocurrencies
Besides intrinsic value, its entry-level costs are the other difference between gold-backed cryptos and mainstream cryptocurrencies. Most of the investors in their early days who were quick to buy mainstream cryptocurrencies had to spend only pennies. Nevertheless, for a cryptocurrency backed by gold, the minimum investment must be equal to the current gold price.
The difference between these two classes on cryptocurrencies is their price fluctuations. While the price of digital mainstream coins like Bitcoin and Ethereum will rise and fall to any point, cryptocurrencies backed by gold have a built-in stop loss.
As we have already stated, the value of a cryptocurrency backed by gold cannot fall below the value of gold. When such a coin achieves huge popularity, its price could well rise above that of gold. But if the gold-backed crypto isn’t doing well, its value will stay at a gold pace.
Now let’s look at the best Gold backed cryptocurrency which is going to launch soon.
Sudan Gold Coin
Sudan Gold Coin with the token name SGC Token is among the few real Gold backed Cryptocurrency. It is a unique blend of Blockchain and Real Gold Mining Technology. SGC Token aims at addressing the confusion that the cryptocurrency market is currently facing.
The project will also indirectly invest in Sudanese gold mining operations to give users of the open platform the right to purchase the gold mined in Sudan. Furthermore, the Sudan Gold Coin (SGC) Project provides its crowdsale investors a unique opportunity to participate in a project in which both crypto and real-world assets are linked to digital tokens (Sudan Gold Coin), with the additional right to purchase a predefined amount of physical gold.
Important News
SGC is launching the IEO on coming 26th Feb 2020 on a reputed Korean Exchange ChainX, you can buy the tokens directly from the exchange here – https://chainx.kr/ and also from the official website –https://sudangoldcoin.com/
Sharukh Khan
Shahrukh writes all things about the blockchain and cryptocurrency. He studies Business and Economic Reporting.
