Bitcoin has been compared to gold for years now, in that many see it as a reserve. It is finite, it isn’t officially recognized as a currency, and there has been a mad rush to get hold of it since its “discovery”. So, the parallels aren’t unreasonable. We even have Bitcoin Gold, one of the recent hard forks.
Now, one of the world’s leading players in the gold market is planning to release its own cryptocurrency, backed by real gold. Perth Mint is estimated to export around $20 billion in gold and other precious metals every year. However, there is no doubt that gold investment has taken a back seat when compared with the cryptocurrency market. So, Perth Mint are adopting an “If you can’t beat them, join them” approach, and hopping on the blockchain bandwagon to entice people back to gold.
A More Secure Choice
The argument would be that a cryptocurrency backed by a physical commodity would represent a more secure investment than a traditional cryptocurrency. We have seen this argument before – from Venezuelan President Nicolas Maduro, who is still pressing ahead with ambitious plans to create an oil-backed cryptocurrency for his country, despite protests.
There are similarities here. Perth Mint is owned by the government of Western Australia, so there will have been talks at the top level before deciding on the announcement. The CEO of Perth Mint, Richard Hayes, spoke to ABC News. He said:
I think as the world moves through times of increasing uncertainty, you’re seeing people look for alternate offerings. And you’re seeing this massive flow of funds into the likes of Bitcoin at the moment because people are looking for something outside of the traditional investments. With a crypto-gold or a crypto-precious metals offering, what you will see is that gold is actually backing it.
While no concrete dates have been announced, the CEO expects the cryptocurrency to be officially confirmed later this year, with a potential release date of 2019.
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What do you think about the concept of commodity-backed crypto? Would you invest in a gold-backed currency? Let us know in the comments below.