By now you may be familiar with stablecoins; cryptoassets linked to another asset or currency, often the US dollar. The stablecoin industry is huge and an important part of the entire crypto system. But there are also crypto coins that are linked to gold; also tokenised, or tokenized, called gold. Think of it as a stablecoin pegged to the value of gold. The combined value of these assets has passed USD 1 billion with the recent rise in the gold price.
Gold tokens on the rise
This is according to dates of the crypto platform CoinGecko. The two largest forms of tokenized gold are PAX Gold (PAXG) and Tether Gold (XAUT). Both coins each have a market capitalization of around $500 million.
The gold stablecoins, or gold tokens, offer investors a way to invest in gold without exposing themselves to funds managed by large institutions. It also makes investing in gold possible without actually owning physical gold.
As mentioned, the tokens are linked to the value of gold and they represent the issuer’s physical possession of gold. PAXG’s publisher is Paxos, and XAUT’s publisher is Tether. Tether is also the issuer of USDT, by far the largest stablecoin in crypto land with a value of approximately $80 billion.
The digital gold
Since the beginning of March, not only the price of bitcoin (BTC) has been on the rise. In response to the US banking crisis, the price of gold has also risen sharply. At the time of writing, the value of an ounce of gold is $2,024, several percentage points below the historic peak of $2,074.
The correlation of the last few months between gold and bitcoin is no surprise. Bitcoin is also called digital gold for a reason. During last year’s bear market, it became clear that investors are using bitcoin more as a risky speculative asset, but it is slowly starting to regain its status as a store of value.
America’s problems in the banking sector have resurrected bitcoin from the ashes as a classic inflation hedge. Investors seem to be hedging against the current financial uncertainties by adding bitcoin to their portfolio in addition to gold.
