This year has seen renewed interest in gold-backed stablecoins. These unique digital assets provide the store of value characteristics of gold and combine them with the convenience of blockchain assets. There are many types of stablecoins but gold-related tokens are one of the fastest-growing types. Here are some of the key reasons why gold-backed stablecoins are on the rise.
Brief History of Gold-backed Stablecoins
The idea of gold-backed digital assets had been around for a long time. The first version required you to mail in your gold to a central location. From there, you would be issued a digital asset. This approach was quickly overshadowed by centralized reserve approaches.
This strategy was better for the average person because it didn’t require you to have gold first. The first gold-backed stable coins had reserved but lacked much of the transparency of today’s advanced networks. The best protocols would leverage third-party auditing firms to prevent loss of faith and keep the community informed.
What’s Driving Interest in these Assets
When you examine the current state of the market there are many reasons why people are seeking out new ways to preserve their wealth. This market uncertainty has led to innovative advancements in the market such as the creation of safehaven tokens. These digital asset leverage years of advancements made in the blockchain sector to reduce volatility.
People have wanted the stability of gold and the convenience of blockchain assets. This combination of features could make the ideal store of value and still provide services as a day-to-day currency. The main thing to focus on to accomplish this task is transparency as the community needs to be able to verify the network reserves. Today’s advanced networks have full transparency and provide regular updates regarding audits.
Volatility Concerns Continue
How stable are stablecoins? The answer to this question depends on several factors ranging from the technical structure to the reserves used. Crypto traders are no strangers to volatility in the market. However, volatility is a serious roadblock to institutional and commercial crypto adoption.
Merchants are not able to accept payments that may fluctuate by the time they clear. Additionally, long-term savers are at a serious disadvantage when they are unsure how their assets will stand up against time. Bitcoin is the perfect example of a solid but very stressful volatile store of value. Those who are willing to buy Bitcoin early see returns on their holdings. However, there is a lot of volatility and stress that will come from waiting this time out.
Gold-backed stable coins eliminate volatility by using one of the world’s most stable assets as reserves. Gold is still held by countries internationally, It’s not very useful to the average person but it still holds a lot of value globally when discussing governments. Gold-backed stable coins enable the average person to gain exposure to gold-related assets without the need to hold the commodity directly.
Beat Inflation
Inflation is another issue that has made more people turn towards decentralized options. Inflation is a loss in buying power. It’s a problem that can become a serious issue if not corrected. Sadly, the normal methods used to correct the issue such as raising interest rates also can create recessions in the economy.
Inflation is an issue that savers can’t avoid. They are affected the most by the long-term degradation in the value of their holdings. Those with set incomes can attest to the rising inflation and how it’s eating away at any additional funds that existed before the loss of buying power.
Stablecoins don’t suffer from inflation like fiat currency. Gold is a limited supply asset. Unlike fiat currency, that can be printed at will by governments to meet their needs, gold has to be unearthed. Additionally, there isn’t that much gold in the world. There are only 53,000 tones of gold in identified reserves. This limited supply strategy is duplicated by gold-based stablecoins.
Notably, the META 1 Coin integrates smart contract protections to reduce the chance of sudden value loss. The network has an asset protection system that crosses references the value of the token against the asset value. Trades need to meet this value or they are not permitted. This protection prevents sudden sell-offs by trading groups or bots.
Bad Monetary Policies still Plague Market
Bad monetary policies are one of the main reasons why the economy is in shambles. Politicians are not economists and in many instances, they make decisions that make sense politically but not finically. These decisions have real-world effects. For example, 33% of the circulating supply of USD was printed following the pandemic. The buying power of the USD quickly fell in most areas including energy and food.
Gold is not controlled by any single entity in particular. However, it’s common for gold to have restrictions on import and export depending on where you live. Gold-backed stablecoins make it easier for people to leverage the value of gold internationally. They can be sent across borders in a permissionless manner.
Financial Warfare
Another reason why gold and gold-related blockchain assets have a new following is the increased use of financial warfare. Financial warfare is the use of sanctions and other economically stifling methods to bring a nation’s economy to its knees. These policies target civilians by targeting their livelihood with the goal of eliminating their support.
Projects like META 1 Coin are buffered against regulatory bite back via their location. The META 1 Coin is incorporated outside the jurisdiction of centralized regulators. This decision was made to prevent long-term savers from suffering losses due to government regulations. It also enables the project to offer its services globally.
How do Today’s Mot Advanced Stablecoin Stack Up Against Early Versions
There have been a lot of attempts to make stablecoins that are resistant to all the risks that make the idea of stable crypto difficult. For example, the first stablecoins were backed by other cryptocurrencies. In theory, this concept was better because it provided full transparency to the market.
The reality was much different as it became evident that using crypto assets as reserves creates new risks. Primarily, the fact that the reserve asset could lose value faster than the asset it’s backing. When this occurs, the stablecoin is unable to recover and fails overnight. Today’s most advanced stablecoins combat this risk by integrating asset value protection mechanisms and other systems.
Problems with Gold-Backed Stablecoins
There have been some issues with stablecoins in the past that have made them lag in adoption. These issues include problems such as a lack of transparency and technical restrictions. It wasn’t until recently that the technology caught up with the concept. The best options have moved on from single-asset reserves. Networks like META 1 Coin leverage a basket of gold reserves.
Safehaven Tokens
Safehaven tokens are the evolution of the stablecoin concept. These assets integrate smart contracts to remain stable. META 1 Coin is the most popular safehaven token in the market currently. The token derives value from a basket of gold-related assets as part of its strategy.
The decision to diversify the reserves makes sense because it protects users against sudden discoveries of gold in the market. META 1 Coin combines them with an asset protection system that cross-references all trades and protects against sell-offs. This protection works in tandem with the whale restrictions.
Protect Decentralization
No whales are allowed in the METANOMICs DeFi ecosystem. The developers have introduced a humans-only restriction that requires all users to prove they are humans. The removal of corporations and trading firms from the ecosystem helps to improve stability by eliminating large-volume traders.
This restriction is also in place for government agencies. The META 1 Coin was created for the people and the developers have shown through these protections that they are concerned with the long-term stability of the project over short-term gains. META 1 Coin was the first to integrate whales from their services. The decision has paid off as the network remains decentralized and continues to see growing value.
Token Limit
The use of token limits in the DeFi sector is new. META 1 Coin limits individual wallet holders to $5M per wallet. This restriction prevents corporations from infiltrating the network acting as regular users. It also presents mass sell-offs by trading groups when used with the asset value protections.
Provide Ways to Secure Passive Income
Another major plus for META 1 Coin users are the introduction of DeFi options. Users can secure rewards without risking their original assets as part of this strategy. For new users, this is the better option versus trading where you could lose what you started if the market turns in an unexpected way.
META 1 Coin has a variety of ways to secure returns including staking. Staking is a popular way for people to increase their holdings. Staking refers to locking your tokens into a smart contract. You receive rewards based on the amount you stake. There are many different types of staking protocols. The most popular are used to validate networks such as in PoS systems.
META VAULT Is a Great Way to Generate Wealth
The META VAULT is the best option for new users in the DeFi space. This feature operates like a normal bank count. You simply deposit your tokens and the returns are deposited in the account. The returns are paid out in META 1 Coins which makes it possible to leverage compounding returns.
The META VAULT provides a debit card option to users. This card converts your tokens to fiat when you swipe it. The process only takes seconds to complete and the vendor has no idea you paid using a crypto asset. This approach opens the door for more crypto use because you can now spend your rewards at the thousands of locations that accept MasterCard.
The META EXCHANGE
The META EXCHANGE plays a vital role in the greater METANOMICs ecosystem. This high-performance exchange can handle trading throughput on par with the NASDAQ and other globally recognized exchanges. The network operates in a noncustodial manner and doesn’t require you to provide personal information.
The elimination of personal data from the exchange scenario improves your protection. It prevents data theft at a later date and lowers the chance of people finding out you hold crypto in the first place. Remember, crypto traders use discretion as their first line of defense against hackers.
Examine the Purpose
The META 1 Coin was made to follow Bitcoin’s purpose to provide a more transparent and freer economy. The tokens founder, Robert P Dunlap, spent years researching why the majority of people never reach their financial goals. What he discovered was that the primary reason was that they were working against the system.
He knew that a new option was needed to open the door for true wealth generation. With this thought in mind, he set off to create the META 1 Coin. You can see this desire in the token’s features and options. Today META 1 Coin remains a community-led project that has helped people from all over the world escape inflation and store value.
It Has to be Easy to Use to Win
The META VAULT leverages the onramp portal to streamline adoption. This interface makes it easy to convert fiat into crypto in seconds. The system seamlessly converts your funds into META 1 Coins and deposits the tokens in your network wallet. When used with the MasterCard option provided by the META VAULT, anyone can easily enter the DeFi system and win rewards and spend them.
Gold-Backed Stablecoins Are the Future of Blockchain
Projects like META 1 Coin integrate the best DeFi features and gold stability to create a new level of usability. Gold-backed stablecoins have been thrust back into the limelight thanks to the creation of safehaven assets like META 1 Coin. As such, you can expect to see more developers follow suit to attempt to fill the growing demand for these stable assets.