Gold is by far the most common asset used to back stable coins. Many people, on the other hand, employ a variety of precious metal baskets. Bitcoin and other decentralized cryptocurrencies have gained in popularity in recent years. Despite this, many people are still hesitant to trade these digital tokens. This fear stems from the significant volatility that bitcoin is known for and the possibility of losing money. As a result, some people want their virtual currency linked to a more stable asset, such as dollars or gold. This sort of cryptocurrency is known as “stablecoin” and is well-known for its dependability.
Stablecoins are assets that are connected to other assets like dollars or precious metals. Gold, silver, platinum, and palladium are among these metals, and their unions produce whole new crypto-like Platinum Coin or Silver Coin. They have less market volatility than cryptocurrencies like Bitcoin because they are pegged to these metals and currency. Stablecoin traders seldom lose money since the underlying asset price never falls below the cost of the stablecoin.
Cryptocurrencies backed by precious metals are rising in popularity, so it’s critical to grasp what they’re all about.
A quick rundown of stablecoins
A’stablecoin’ is a cryptocurrency that is aimed to reduce the volatility that investors see while dealing with cryptocurrency. Stablecoins with a stable value are frequently backed by a distinct asset, although an algorithm can alternatively support them.
Consumers buying or selling non-currency goods and services may notice a significant price change during or after the transaction. Without the need for either partner to return to money, stablecoins give everyone an equal chance at success.
There is no such thing as a single sort of stablecoin. There are a number of them, including the following:
Stablecoins backed by fiat currencies, such as the Chinese yuan, are known as fiat-backed stablecoins. As collateral, this cryptocurrency retains a reserve of that particular currency. Precious metals (such as silver and platinum) and commodities are examples of fiat (ex. oil and corn).
Crypto-backed stablecoins: In the case of crypto-backed stablecoins, crypto can back other cryptos. To compensate for the higher relative volatility of backing stablecoins with crypto, the currency maintains an overcollateralized position.
Stablecoins that are backed by physical assets, like gold or real estate are called commodity-backed stablecoins. Gold is by far the most common asset used to support stablecoins. Many people, on the other hand, employ a variety of precious metal baskets.
The precious metal gold
On the market, an extensive range of gold-backed cryptocurrencies is accessible. Tether Gold (XAUT), DigixGlobal (DGX), and Gold Coin are other examples (GLC). The latter is fractional, meaning that each coin represents a fraction of a gram of gold. As a result, the entry barrier to Gold Coin is shallow. This contrasts with other currencies — and gold itself — where the initial investment might be relatively high.
Perth Mint Gold Token is another example (PMGT). This cryptocurrency is one of the unique gold-backed cryptocurrency tokens on the market, as it is backed by gold blocks from Western Australia’s Perth Mint. The Australian government guarantees the currency’s legitimacy by verifying the gold’s weight and purity.
Sliver
Silver may not be the most popular cryptocurrency among some because of its association with gold, but plenty of silver-backed cryptocurrencies are available. The three major ones are Silver Coin, Silverlink’s (LKNS), and Silver Token.
Silver Coin is a fractionalized cryptocurrency with excellent security features and wide applications, making it a popular choice among many investors. Those who invest in this stablecoin can redeem it at any time for 99.9% silver bullion.
One gram of 0.999 certified silver is equal to one LKNS token. The idea behind this silver-backed cryptocurrency is to make buying digital silver as simple as buying any other cryptocurrency.
When it comes to Silver Tokens, each coin represents 1:1 ownership of a single ounce of investment-grade bullion in silver. This cryptocurrency generator holds 99.9% silver and adheres to the London Bullion Market Association’s guidelines.
Metals not listed above
While gold and silver are the most well-known precious metals, they aren’t the only ones that support stablecoins.
When it comes to Silver Tokens, each coin represents 1:1 ownership of a single ounce of investment-grade bullion in silver. This cryptocurrency generator holds 99.9% silver and adheres to the London Bullion Market Association’s guidelines.
Metals not listed above
While gold and silver are the most well-known precious metals, they aren’t the only ones that support stablecoins. Palladium, Rhodium, and Platinum coins are available. Most precious metals have a stablecoin that is tethered to their value, allowing investors to diversify their portfolios beyond gold and silver.
