Out of all the projects ever launched, the Stable Report data indicates that more than 150 stablecoins are either inactive or dead. Moreover, more than 40 stablecoin projects that were backed by gold have already closed up shop.
According to Blockdata, it's vital that fiat-backed stablecoins have some type of centralized entity controlling the security and that gold-backed assets have to be able to prove that the gold reserves exist and are stored somewhere safe.
If a stablecoin is backed by gold reserves, it should be solid enough to survive the extreme market movements often experienced by other digital currencies.
The reality of last year's market suggests that gold is not the best choice for the currency of the future, as many gold-backed stablecoin projects failed.
Choosing solid ground for a stablecoin projectThus, we can conclude that by using gold as the underlying layer to a stablecoin, its creators increase the chances of a project failure.
Tether, a controversial but significant platform issuing stablecoin, has recently announced its plans regarding the launch of a digital asset providing exposure to physical gold.
While Bitcoin has often been regarded as "Digital gold," only the future will tell whether either Tether Gold or another similar project comes out on top.
In these circumstances, the new-age global money transfer system can't be built upon gold since governments across the globe confiscated gold in the 1930s.
We can't say that gold can be 100% replaced by digital assets, as doing so still represents difficulties.
Ultimately, gold is not the asset that stablecoin-issuing companies should look up to, but there are possibilities to tie cryptocurrency to other assets - such as the United States dollar or the euro.
Why Betting on Gold-Backed Stablecoins Is a Losing Game
gepubliceerd op Mar 4, 2020
by Cointele | gepubliceerd op Coinage
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