By Adedapo Adesanya
The rampant currency depreciation witnessed across many emerging markets has intensified the case for decentralized cryptocurrencies like Bitcoin (BTC) and USDC as stores of value or hedging assets.
However, gold, as the most valuable asset in the world, remains highly sought after as a hedge against inflation and a store of value through market ups and downs, and this has spurred the introduction of Tether Gold.
Tether Gold (XAUT) is a digital asset that is pegged to the value of gold. Each unit of Tether Gold is linked to the price of one troy ounce of physical gold, which is stored in a vault.
Launched in 2020 by TG Commodities Limited, Tether Gold (XAU₮) is a stablecoin that provides ownership on a 1:1 basis of one fine troy ounce of gold on a physical bar of gold that meets the Good Delivery standard of the London Bullion Market Association (LBMA).
According to Tether Gold, this technology allows access to a stablecoin that provides ownership of physical gold while avoiding the drawbacks associated with physical gold, such as high storage costs and limited accessibility.
“Holders of XAUT obtain the combined benefits of both physical and digital assets. XAUT token holders will be able to enjoy ownership of gold while avoiding drawbacks associated with physical gold, such as high storage costs and limited accessibility.
“Unlike fiat paper currency, coins, or other assets, gold has maintained its value throughout the ages. People see gold as a way to pass on and preserve their wealth from one generation to the next.”
In an interview, Tether’s Chief Technology Officer, Mr Paolo Ardoino, added that gold is an excellent hedge against inflation because its price tends to rise when the cost-of-living increases. In this unprecedented time in which central banks print more money than ever, gold is a great choice to store your wealth because of its scarcity.
According to Tether, putting gold on a blockchain unlocks a variety of characteristics that typically only crypto assets possess:
Tether Gold tokens provide undivided ownership rights to gold on the specified gold bar(s). the allocated gold is identifiable with a unique serial number, purity, and weight, so the XAU₮ holders can easily check the details of the gold bars associated with their address.
Owning physical assets on the blockchain provides you with the combined benefits of both physical and digital assets. As a XAUt token holder, users will be able to enjoy ownership of gold while avoiding drawbacks associated with physical gold, such as high storage costs and limited accessibility.
Another advantage is the constant availability of a digital token. Tether Gold tokens are available on markets operating 24 hours a day, seven days a week. It means that when the traditional markets for gold are closed, it’s still possible to buy or sell Tether Gold tokens.
With Tether Gold tokens, users have the possibility to redeem them for physical gold or USD fiat currency.
One of the main advantages of Tether Gold is that it provides investors with exposure to gold without the need for physical ownership. This means that investors do not have to worry about the storage and insurance of the metal, which can be costly and cumbersome.
Second, the cryptocurrency is an ERC-20 token, meaning it can be moved easily on the Ethereum blockchain and transferred to different addresses. Tether Gold holders have ownership rights to specific physical bars and can identify the details with a unique serial number. They can even redeem their tokens for the real thing by going through a verification process.
“The holder’s physical gold can be delivered to a location of their choice in Switzerland, or the holder can request that TG Commodities Limited attempt to sell the gold and receive the cash proceeds from that sale.”
Compared to other crypto assets, Tether Gold is also a stable investment tool, which means that it is less volatile than other digital assets that are not backed by any underlying assets.
As such, Tether Gold provides investors with a way to diversify their portfolio by adding an asset that has traditionally been considered a safe haven. Gold has historically been viewed as a reliable store of value, and Tether Gold allows investors to combine the security of gold with the convenience and accessibility of a digital asset.
