At the heart of all monetary matters is the emotional belief known as confidence. And without it, both currencies and markets crash or collapse in very short order.
This is one of the reasons why cryptocurrencies have suddenly become such a hot commodity, or more specifically, a hot alternative to the declining confidence in sovereign currencies.
Cryptocurrencies are also filling a void left by the world's dislocation from resource, or more accurately gold backed money. And in this, the rise of gold-backed cryptocurrencies have the potential to be much more than a savings vehicle or currency alternative because they run on the blockchain.
In fact, they will have the power to fundamentally change the way gold (and eventually all precious metals) are bought, sold, and traded.
Gold provides investors with a degree of protection against currency debasement, it is a smart insurance against inflation, and it provides economic stability in times of geopolitical uncertainty. Yet, despite the obviously inherent benefits in gold, many investors have lost a great deal of money on gold investments. For most of the investors that lost money on gold investments, the major culprit was the fact it was often easier to buy gold than to sell the bullion.
One of the inherent risks in gold ETFs is that the performance is less the annual management expense, which can range from 0.3% to 3%. Gold ETFs are also easily traded but you can expect to pay broker fees, which can range between $5 and $50 on each trade.
The bigger risk is that the fund/fund provider of your ETF might become insolvent (some funds are not 100% invested in physical gold) and your money and gold will go down the drain.
The inherent risk in investing in physical gold is that storage tends to be expensive and the expense will eat into your profit margins. Insured gold costs will cost about 1.5% of the value of the gold you plan to store per year. If you store the gold at home, you'll need to consider an increase in your home insurance premium. The worst part is that you'll have a hard time selling the gold if you choose self-storage because it has been removed from the registered circulation and there'll be doubts on its purity.
Take all the inherent advantages of gold; stability, security, valuable, non-degradable; combine it with the transparency, digital form, transferable, divisible, and secure properties of blockchain and you'll have GOLD. GOLD is the first-ever token that is 100% backed by gold.
In essence, GOLD provides cryptocurrency investors a unique opportunity to use a digital asset 100% backed by gold to hedge their cryptocurrency investments. The best part is that you get all in inherent hedging advantages that traditional gold gives without going through the stress of buying, storing, insuring, or losing management fees on your gold holdings.
The global gold trade is mostly a closed-end deal under the direct monopoly of a handful of financial juggernauts. GoldMint is planning to disrupt the global gold trade industry with Custody Bot, which is a blockchain connected robot programmed to inspect, store (temporary and long-term), and transfer physical gold, jewelry, coins, or gold bullion. - Benzinga
While the above information focused primarily on one company (GoldMint), the reality is that there are emerging right now several private and sovereign plans for physical gold backed cryptocurrencies that will perform a myriad of functions that include trade settlement, consumer spending, investment, and savings.
It could almost be said that the blockchain came to humanity at the perfect time when the old monetary and financial systems are bringing the world to the brink of insolvency and collapse. And without a completely new paradigm to provide hope and a renewal of confidence once that collapse takes place, economies would degrade rather than overcome just as they have many times in history when one dominating empire that controlled the previous system fell.