Bittime - A gold-backed token is a type of crypto token whose value is determined by the price of gold in the market. This token functions as a digital medium of exchange that can be used for online transactions without the need to own physical gold.
This token can also be exchanged for physical gold according to the terms of the issuer.
Thus, gold-backed tokens offer the benefits of both worlds: the convenience and speed of crypto, and the stability and security of gold.
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How Are Gold Backed Tokens Created?
Gold-backed tokens are created by locking a certain amount of physical gold in a safe and trusted storage place, such as a professional or central bank vault. Each token issued represents a portion of that stored gold.
Token issuers must ensure that the number of tokens in circulation always corresponds to the amount of gold stored, and must be able to prove ownership and authenticity of the gold.
Token issuers must also provide a mechanism to exchange tokens for physical gold for token holders who desire it.
What are the Benefits of Gold Backed Tokens?
Gold-backed tokens have several advantages, including:
Maintain value
Gold-backed tokens are not affected by frequent crypto price fluctuations, as their value always follows the price of gold in the market. Gold itself is a stable asset and has been in demand since ancient times, so it can be used as a long-term store of value.
Increase liquidity
Gold-backed tokens can be easily traded on various crypto platforms, without the huge costs or time required to send or receive physical gold. This token can also be integrated with various digital financial services, such as wallets, debit cards or payment applications.
Provide alternatives
Gold-backed tokens provide an option for investors or crypto users who want to diversify their portfolio with assets that are different from conventional crypto. This token could also attract interest from gold enthusiasts who want to try the world of crypto without leaving gold behind.
Also Read: What is Liquidity Provider Token (LP Token)?
What is an Example of a Gold Backed Token?
Currently, there are several gold-backed tokens circulating in the crypto market, with varying characteristics and features. Here are some examples of gold-backed tokens:
Pax Gold (PAXG)
PAXG is a gold-backed token issued by Paxos Trust Company, a company regulated by the New York State Department of Financial Services. Each PAXG token represents one ounce of London Good Delivery gold bullion held in a professional vault.
PAXG token holders can exchange their tokens for physical gold at any time, with low fees and a fast process. PAXG can also be used to participate in various decentralized financial services ( DeFi ) on the Ethereum blockchain.
Tether Gold (XAUT)
XAUT is a gold-backed token issued by Tether Limited, a company that also issues the famous stablecoin Tether (USDT). Each XAUT token represents one ounce of gold bullion stored in professional vaults in various countries.
XAUT token holders can exchange their tokens for physical gold for a minimum of 50 tokens, with fees varying depending on location and withdrawal amount. XAUT can also be used to participate in various DeFi services on the Ethereum blockchain.
Perth Mint Gold Token (PMGT)
PMGT is a gold-backed token issued by InfiniGold, an Australian technology company. The company collaborates with the Perth Mint, an institution that manages the Australian government's gold reserves.
Each PMGT token represents one ounce of gold bullion deposited at the Perth Mint. PMGT token holders can exchange their tokens for physical gold or digital gold certificates issued by the Perth Mint. PMGT can also be used to participate in various DeFi services on the Ethereum blockchain.
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How to Buy Gold Backed Tokens?
Gold-backed tokens can be purchased in the same way as purchasing other crypto tokens. This means that this token can be purchased using a crypto trading platform (exchange) or crypto exchange service ( swap ).
Some crypto exchange services that provide gold-backed tokens include Uniswap, Curve, and 1inch. To purchase a gold-backed token, you must have a crypto wallet that is compatible with the token.
For example, a wallet that supports ERC-20 tokens for Ethereum-based tokens. You must also have another cryptocurrency that can be exchanged for a gold-backed token, for example Bitcoin, Ethereum or USDT.
Conclusion
Gold-backed tokens are a type of crypto token whose value is determined by the price of gold in the market. This token functions as a digital medium of exchange that can be used for online transactions without the need to own physical gold.
This token can also be exchanged for physical gold according to the terms of the issuer. Gold-backed tokens offer the benefits of both worlds: the convenience and speed of crypto, and the stability and security of gold.
Gold-backed tokens can be purchased using a crypto trading platform or crypto exchange service, provided they have a compatible crypto wallet and another cryptocurrency that can be exchanged.
Gold-backed tokens are an attractive alternative for investors or crypto users who want to diversify their portfolio with assets that are different from conventional crypto.
How to Buy Crypto on Bittime
You can buy and sell crypto assets in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
To be able to buy crypto assets on Bittime , make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet . For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Monitor price chart movements of Bitcoin (BTC) , Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also read:
What is a Liquidity Provider Token (LP Token)?
DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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