Gold-Backed Cryptocurrency: What to Know About the Digital Token Assets of Tomorrow?

Gold-Backed Cryptocurrency: What to Know About the Digital Token Assets of Tomorrow?

We often equate crypto assets with Bitcoin. It’s the oldest and largest money-like asset. No one could have predicted the success of Bitcoin. It was an open-to-all-comers, attracting everyone from libertarians to privacy-obsessed coders. About ten years ago, Bitcoin was around a buck. These days, its value hovers around $50,000. It’s the mother of all bubbles for good reason. In the ever-changing world of digital currency, it’s hard, if not impossible to predict what tokens or coins will generate interest. But that doesn’t stop some from trying. If we were to pick the next crypto to explode, that would be gold-backed cryptocurrency.

Cryptocurrency or gold for a rainy day? Actually, both. In the past couple of years, a number of digital tokens have been launched as alternatives to Bitcoin (and other major coins). Gold-backed cryptocurrency is seeing high adoption in modern times. The idea to launch cryptocurrencies pegged to gold came about in 2017 when the price of Bitcoin matched that of gold. Nevertheless, it’s only recently that the idea has been transposed into reality. Cryptos backed by gold have the potential to address regulatory and policy concerns by decreasing volatility and facilitating wider adoption.

A Gold-Backed Coin Isn’t a Stable coin, But It’s Built to Offer More Stability

A Gold-backed coin is very much similar to a stable coin in the sense that it ensures price stability through being supported by a reserve asset. Since the digital token is pegged to the current gold price value, it doesn’t withstand volatility, as opposed to other cryptocurrencies. The fluctuation in gold price is minimal, so it’s not surprising to learn that gold is often used to hedge inflation. Gold maintains its value during recessions and economic downturns, so it offers countless opportunities for investors. Cryptos backed by gold represent the latest innovations in the investment landscape. AABBG has become the most tradable cryptocurrency.

While blockchain accounts for the coins, the physical gold is stored in private vaults. If you’re interested in investing in gold-backed cryptocurrency, understand who actually owns the gold and how it’s stored. The fact is that not all projects are fully backed by gold. Do your homework and validate claims prior to making an investment. It’s recommended to remain vigilant and manage your portfolio to keep risks at bay. Getting back on topic, if you have your mind set on AABB Gold Token, it can be purchased via the AABB Wallet app.

Several Factors Are Fueling the Growth of Gold’s Value

Gold prices continue to glitter, so as to speak. Gold has always been a precious commodity, holding a special place of actual and symbolic value for humanity. The price of gold isn’t set by any organization. On the contrary, it all depends on how much it costs to produce it and, most importantly, how much people are willing to pay for it. In what follows, we’ll shortly discuss the main factors affecting gold prices:

●       Inflation anxiety. Worries about the inflationary impact of investment makes sense if you’re working with numbers. Individual investors and companies alike seek to gain direct exposure to gold, considering it safe enough for investing.

●       A weaker U.S. dollar. Many see the dollar weakening as the power of the exceptionalist paradigm wanes. In case you didn’t know, the price of gold is inversely related to the value of the U.S. dollar. Any weakness pushes up gold prices and vice versa. Therefore, if the U.S. dollar starts to lose its value, gold becomes more valuable.

●       Central bank reserves. Central banks purchase gold time and time again. The aim is to diversify reserves. These financial institutions are responsible for their nations’ currencies, which can be subject to swings in value.

The coexistence of gold and cryptocurrency is more than welcome. Investors can leverage a strong asset, not to mention mitigate extreme volatility.

The Technological Characteristics of Gold-Backed Cryptocurrency

Gold-backed cryptocurrency is financial technology. So let’s remember that financial technology creates vast opportunities for inclusion and helps us move closer towards sustainable development. The idea of a decentralized financial system didn’t meet with hostility. As a matter of fact, blockchain was rapidly adopted for money transfers. In the beginning, cryptocurrencies were used exclusively for decreasing transaction costs and streamlining cross-border transfers. Nowadays, digital assets are deployed to overcome the limitations of popular and heavily used instruments. Unlike Bitcoin or Ethereum, products like AABBG keep volatility in check.

Indonesia is planning to launch a blockchain-based, precious metals-backed payments and savings platform. Why? To promote financial inclusion, of course. By connecting digital tokens to precious metals, it’s possible to bring down the costs for users and make it simpler for them to access financial services. Financial inclusion enhances the availability of economic resources and promotes the concept of saving among the poor. To put it simply, it facilitates day-to-day living.

How Can You Use Gold-Backed Cryptocurrency? There Are Only Two Ways

Holding on to the gold-backed coins can turn out to be a safe move. The reason for this is that you’re not exposed to market volatility and, most importantly, you can avoid the risk of buying high and selling low. You should keep your cash in a brokerage account and wait for the right time to make an investment. Before deciding to sell, be sure that your investment goals are realistic. Even if you’ve had a rough year, that’s not a good enough reason to let go of your digital tokens. Once you’ve decided to sell an asset for the right reasons (balancing your trading portfolio or releasing much-needed capital), minimize fees and taxes.

The other option at your disposal is to take part in decentralized finance projects. More exactly, you can get involved in crypto lending. For the purpose of clarification, crypto lending is a way of borrowing funds from a lender using cryptocurrency as collateral. If you need money and have sizable holdings, it’s an alternative worth considering. Nonetheless, if you’re purchasing gold-backed coins to lend money through a platform, there are some risks involved, especially if other cryptos experience some downswings. Getting back to the point, you can lend the crypto assets and earn interest during that time. They’re commonly referred to as crypto dividends.

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