Gold-Pegged Cryptocurrencies

[Shaun]

I was having a discussion about this today and thought I was ask here to see if I'm missing something.

I am a big proponent of blockchain technology, the problems it does and can solve. However I cannot stand products being created for the sake of a buzzword. I believe gold-pegged cryptocurrencies are exactly that, or am I missing something here?

The so called benefits are cost of storage, ease of transfer and trade. Though you can easily trade paper gold already, don't have to own physical if you don't wish to. With gold-pegged cryptocurrency you still have third party risk as you don't actually own anything in my opinion unless it's in your possession.

So what problem does this solve exactly?

[Mike]

I’ll start this by saying I know very little about the crypto world, however from what you have said I assume they purchase the gold to match the mined currency to keep it in balance, if so it’s similar to a gold ETF surely? The difference being you can put an ETF in an isa wrapper.

that said, perhaps its of interest to people who only want to hold crypto and the idea is it gives them a safe(r) haven to go in times of high volatility without stepping outside of crypto and the various instruments that exist? I can’t see how it can make the investor any money though other than by gold spot movement, unless they started removing crypto from circulation, the opposite of a mining?

its not for me, but I do understand the argument those that don’t want to hold physical make and that’s fair enough.

[SovereignSaurus]

I think the idea for having a gold backed crypto would essentially be like trying to rekindle the gold standard that once was. 

Creating a medium of exchange that is better protected from reckless governments or out of control economic stimuli like there used to be before we became fully fiat based. 

It seems we are just so far from any kind of mass adoption and clearly govs around the world don't want to lose the ability to print their problems down the road. Your average person on the street outside of our community doesn't seem to understand money or basic economics to realise the importance of sound money either. 

The kind of bubble that is going on in recent years of just sticking the word crypto or blockchain next to almost anything seems to make its price go up. Any similarities to the dot com bubble? 

[Shaun]

There are many gold-pegged cryptocurrencies already, but more are due to come.

IMHO they are just a fad and as mentioned jumping on the bandwagon, there is no utility to them at all. Why trust one of the many operators instead of say the Royal Mint's vault storage, they offer bullion at or near spot and store for you right? this is no different.

@SovereignSaurus Again I don't feel like it would be any different, you are still trusting a third party not to operate a fractional reserve, would you really trust a company over a government, aren't they just the same? 😄

Blockchain itself is and will change the world, the utility potential is mind blowing that many cannot even comprehend. All of these meme coins and games etc are just a part of the process, they will not survive of course but they don't need to, they are testing vehicles in a way.

[SovereignSaurus]

1 hour ago, Shaun said:

 Again I don't feel like it would be any different, you are still trusting a third party not to operate a fractional reserve, would you really trust a company over a government, aren't they just the same?

Yes still flawed either way in that sense.