The Coronavirus pandemic proved the safety of digital assets as store-of-wealth cushioning holders as traditional markets took a tremendous hit.
Years ago, no one could imagine putting his or her money on a volatile product that only exists digitally. Traditionally, real estate and gold were the most preferred when the world was in chaos, but not anymore. In 2008, the housing bubble exposed real estate, and the ripple effect drowned the world economy.
Introducing Tether Gold (XAUT), a gold-backed token with a multifactor authentication system, though not in an IT perspective, but in a literal sense. Having the fluidity of a digital asset and genuine gold to back it, XAUT appeals to many investors.
Gold speaks for itself as a reliable, physical asset; it has been there for centuries and owned by kings to show off their wealth. Back before the dollar took over as the reserve currency, gold stacked up high and was everyone’s haven in times of crisis.
In 2021 and probably throughout history, people are always looking for safe places to store their wealth. It is accurate that every form of wealth storage has its risks, but digital assets backed by blockchain technologies will calm investors’ tensions about the volatile markets—be it crypto or other industries.
While most people still prefer BTC, backed by demand and supply, the gold-backed cryptocurrency trading in Bitfinex will surely be a hot contender in the future. The tangibility of gold and its scarceness will keep the token alive for a long time.
Tether is a market leader in crypto; it has removed the skepticism surrounding crypto coins, making more people jump ship and put their money in digital assets. Tether gold will rely on this trust as it takes on other contenders.
What is Tether Gold (XAUT)
Fiat currencies’ performances depend on central banks; the banks keep a close eye on the markets and ensure there is enough of the currency in countries to avoid inflation or any other financial shocks.
Unlike ordinary coins, genuine gold in Switzerland backs Tether Gold, while a digital wallet helps to store it as a digital asset. Actual gold increases the confidence of holding the token; it is not any other asset-backed by the greenback. It offers a safety net when fiat currency devalues, taking down with it the digital assets it backs.
Tether has confirmed in a series of statements that it has the keys to its gold vaults in Switzerland; definitely, other layers of security exist to protect the gold, making the asset one of the safest on the planet.
Benefits of Gold Tokenization
USD-backed tokens are still the most preferred today. People have not gotten around the mysteries surrounding gold; perhaps it should remain just that, something to make jewelry.
As Tether continues to cause jitters around the crypto space by introducing gold tokenization, some news suggests that the stable coin of XAUT is 74 percent USD-backed.
Whether this is a good or bad thing, Tether is yet to confirm the matter.
USD-Backed or Gold-Backed
The USD and its associated sign have been a signal of stability for years; even countries that do not agree with the U.S. have adopted the greenback. It is safe to say the dollar will dominate the financial market for a long time as the preferred choice for reserves. However, when does gold become gold, in phrasal terms?
During the Covid-19 healthcare crisis, gold rallied comparatively better than most assets, as economies took a hit. This is a sign that the precious metal will stick around for a while, XAUT, backed by the metal will become a safe option that will surely calm all tensions among investors in future economic turmoil.
How Gold Tokenization Works
Tether has an impressive website that has details of gold bars associated with its token.
Each trader holding XAUT has a small piece of gold in storage, visible in the web portal provided.
The holder can transfer the gold without flying to Switzerland, where it is in storage.
All transactions have a special serial number that doubles as a security feature. Buyers can use the serial number to confirm the weight and purity of the precious metal.
Can XAUT Users Own Gold?
Unfortunately, the gold is in Switzerland, users can request their piece only when within the country. Requests to own actual gold require a special redemption option from Tether. To touch the gold, a user must complete a strict verification process to prevent the commodity from falling into con artists.
Switzerland is a pleasant country, with many beautiful cities and towns. Tether will bring the gold anywhere as long as it is within the borders of the country.
If a holder cannot travel to Switzerland, they can request the sale of their gold and receive their cash through wire transfer or their preferred payment option.
Is Gold-Backed XAUT Worth The Hype?
Skepticism is a word best associated with investors, as most put their money in something that works.
Is XAUT something to consider? Currently, the token has a market capitalization of $50 million. The figure represents the biggest digital asset backed by gold in the world; the second largest is so many points back, making XAUT the industrial leader like Bitcoin in the crypto space.
Gold has performed better in all the active markets so far during Covid, probably because of the massive printing of fiat to issue stimulus checks. In finance, too much of anything is the first step in devaluation. Gold being gold becomes a haven in these moments, and riding along with it is XAUT.
Is XAUT Convenient?
Anyone with bars of gold in their house will attest to the challenges of keeping them safe, especially if the secret got out. It is also difficult to access historical assets to own on a personal level.
XAUT solves these problems; it makes owning gold and Exchange-Traded Funds (ETFs) easier. It removes most loopholes, cuts the lines, and the small costs that add up to a fortune. Individuals do not have to worry about the safety of their commodity as it is far away in Switzerland in a vault. If that is not all, it facilitates exchange, making the prospect of liquid cash significantly easy.
Who Backs XAUT?
XAUT is exuding much confidence in the market currently, as Celsius, an industrial leader in crypto-interest earnings, has added it to its portfolio.
Enthusiasts can now have their cake and eat it, as they can store the token in their Celsius wallets and wait for the changes in the market to earn interest.
Celsius gives three percent interest, depending on daily highs and lows—some extra money on the side.
What Does The Future Hold For XAUT?
XAUT definitely has a bright future.
While many arguments still exist in favor of paper money against precious metals, gold still stacks high as an investment of choice. One of the enormous advantages of gold is its role in making jewelry, one thing that will never run out of style anytime in the future.
Investors will still pay a lot of money to have jewelry, unlike paper currency, whose value is as good as the prevailing economic conditions.
In times of inflation, gold beats paper currency. Big financial institutions such as banks and even the International Monetary Fund (IMF) still hold one-fifth of all gold reserves in the world, factoring in that, a few currencies today rely on gold.
Therefore, XAUT will rely on the confidence of gold to reach new highs in the future.
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