The stablecoin market is booming in 2020. Economic uncertainty due to the coronavirus has drawn many to digital assets that have some sense of stability and consistency amid volatile markets.
Stablecoins are also proving popular as decentralized finance (Defi) continues to expand and gain influence.
The vast majority of stablecoins are fiat-backed. Many, like Tether’s USDT, are backed by traditional currency. A growing number, like Platinum Coin and Gold Coin, maintain precious metals as a reserve currency.
Precious metals like gold, silver, platinum, and palladium have long been prized by investors. Physical bullion is liquid, prized for its beauty, and has served as a stable store of value for generations upon generations.
Cryptos backed by precious metals attempt to bridge the gap between the traditional and digital financial world. They provide investors the opportunity to diversify into digital assets and then redeem virtual coins for physical bullion at any time.
There is a wide array of cryptocurrencies backed by precious metals on the market. It can be hard to distinguish legitimate projects from more questionable ones, as many make bold promises and can be vague about important elements.
Top cryptocurrencies that are backed by precious metals
Here is a list of top cryptocurrencies backed by precious metals. Any of these coins are legitimate investment opportunities available for any interested buyer.
Gold Coin represents the first time a fractionalized gold-backed asset can be purchased with other digital currencies or fiat. This democratizes access to gold and opens up investment opportunities for a wider range of people. Gold Coin is built on the Ethereum blockchain and presents a seamless process for people to easily redeem for 99.9% physical gold bars, rounds, or coins.
Perth Mint Gold Token:
Perth Mint Gold Token is one of the most well-known gold-backed cryptocurrencies on the market. The cryptocurrency is the first digital gold token backed by gold guaranteed by a government. Each coin has bullion in reserve from the Perth Mint, managed by the Australian government. Digital coins are issued by InfiniGold and are backed officially through mint-issued GoldPass certificates. Holders are able to research and specifically see the bullion backing their coins, giving the project a great deal of legitimacy.
Platinum is one of the rarest metals on earth, and buying Platinum Coin presents investors with opportunities to purchase the metal highly desired for its reflective nature and electrical conductivity. Platinum Coin is backed up by secure bullion reserves that undergo regular reviews and are stored in a room with a camera, so holders of the cryptocurrency can view reserve assets at any time.
This cryptocurrency is a leading option for investors eager to take advantage of silver bullion’s low spot price. Each coin is equal to one gram of 0.999% certified silver. Bullion is acquired once an investor places a link on the Silverlink website. Silver is purchased after reviewing spot prices across markets in Australia, China, Peru, Russia, Mexico, and Chile. A Silverlink token is mined via a smart contract once bullion backing is confirmed and a vault receipt is received. Silverlink is built on the Ethereum network and the unique aspect of the coin makes it an enticing investment.
PAX Gold was launched in 2019 by the technology company Paxos. The gold-backed cryptocurrency is unique as it is a U.S. based company that has received approval to operate from the New York State Department of Financial Services. This approval gives the cryptocurrency a great deal of legitimacy due to the myriad of financial laws in the United States. PAX Gold is an ERC-20 coin based on the Ethereum blockchain. A variety of popular wallets, including MetaMask, Trezor, and Ledger, support storage of Paxos Gold
Evaluating Cryptocurrencies Backed By Precious Metals
Investors should do their due diligence before investing in coins backed by precious metals. Some do not have the proper amount of reserve assets, meaning the coin could potentially become entirely worthless. Others make the physical redemption process very difficult.
Those interested in buying cryptocurrencies backed by precious metals should make sure the coin in question has audits performed by a reputable third party to ensure there is enough bullion backing. Projects with outlandish claims of returns on investment, or prices that just seem too good to be true, should be avoided.
Investing in precious metal-backed cryptocurrencies gives people an appealing and easy way to include both digital currencies and bullion in their portfolios.