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When economic uncertainty looms, investors tend to choose assets that hold their value relatively well during periods of upheaval, providing much-needed stability to their portfolios. For crypto investors, gold-backed stablecoins offer a degree of stability that emanates from the token’s underlying asset: Gold.
Gold is stable to economic volatility that usually affects other assets, preventing sudden change in value that such factors such as inflation may cause. While a relatively new form of asset, digital coins backed by gold hold great promise as a favored investment, given their inherent characteristics.
The growing appeal of this new safe-haven investment is evident with the surge of demand and the value of gold-backed cryptocurrencies. The market capitalization of all cryptocurrencies pegged to the price of gold rose 60 percent to reach USD 1 billion for the first time in history early this year, revealing an appetite for a more secure and safe asset class.
While a new entry, Zambesi Gold (ZGD) is among the winners in the crypto space despite the turmoil affecting other asset classes in the market. Zambesi Gold (ZGD) has increased in value within just three months of its launch.
Such strong performances belie the foreboding sense of fear that has otherwise clouded the market amid high inflation and ongoing geopolitical tension. Indeed, gold is historically a great-value hedge against inflation and recessionary trends. Unlike other investment assets, gold tends to increase in value as the cost of living increases.
It is no surprise that many investors turned to gold-backed stablecoins this year even as governments moved to fight off the effects of inflation. In comparison, the price of Bitcoin, Ethereum, and other types of cryptocurrency continues to retreat this year, with the global crypto market capitalization shrinking by more than 6.5 percent, dropping below USD1 trillion.
Coins to watch in 2023
Unlike established digital coins such as Bitcoin and Ethereum, gold-pegged stablecoins are still relatively unknown. Therefore, to better understand the benefits of these digital currencies, it is important to know some of the prominent names in this crypto niche.
Apart from Zambesi Gold, two other notable stablecoins pegged to the price of gold are PAX Gold (PAXG) and Tether Gold (XAUT). Pax Gold (PAXG) is backed by one fine troy ounce of a 400 Oz London Good Delivery gold bar stored in Brink’s vaults. Holders of the PAXG token own the underlying physical gold held in custody by the Paxos Trust Company.
XAUT is a cryptocurrency developed by Tether, the company behind the industry standard USDT stablecoin. A XAUT coin equals a troy fine ounce of gold, backed by physical London Good Delivery standard bars. Both tokens have the largest market capitalization among gold-backed coins, with a combined value of over USD1 billion.
PAXG and XAUT are available on the ERC20 protocol, so they can be moved easily on the Ethereum blockchain and transferred to different addresses.
Zambesi Gold
Zambesi Gold offers many of the same benefits but stands out from the rest as it delivers an entire ecosystem designed to support the development of digital assets as well as the mining operations that produce physical gold assets. Each token’s gold backing will grow through fresh supplies from Zambesi Gold’s mining operations each month. Zambesi Gold will also reinvest 75 percent of its profits to acquire new mines and manage its operations. The rest of the gold will be sent to the vault.
Holders of ZGD coins can also take advantage of a high-earning staking system, where they can receive up to 30% returns on the staked amount every 24 months. Moreover, all tokens received from users withdrawing investments are burned, an important mechanism that will boost the token’s value as more people use it. With the implementation of smart contracts on the blockchain, users are guaranteed that transactions are tamper-proof, fully transparent, and convenient.
For people looking to protect their portfolios or invest in gold, gold-backed cryptocurrencies such as ZGD now offer an easy, reliable, and secure alternative that delivers a host of lucrative incentives while sidestepping many of the inconveniences and risks linked to buying and storing actual gold or investing in cryptocurrencies not backed by real assets.
