There’s no doubt that many investors are looking to hunker their money down in cryptocurrency. With fiat currency certain to succumb to inflation in the next year, these investors want to hedge their bets. But with crypto itself going through a market-wide downturn, what are the best cryptos to buy?
Well, think of where investors have gone prior to cryptocurrency. Gold is a hugely popular store of value investment which many seek refuge in at times like these. What if there was a store of value play in the crypto industry that’s as safe a bet as gold? Well, there is: gold-backed cryptos.
Gold-backed cryptos are similar to stablecoins in that they have real-life assets underlying them. However, where stablecoins have a reserve of fiat currency underlying them to keep prices pegged, gold-backed cryptos are supported by gold reserves. These reserves keep the cryptos pegged at the market price of gold.
Of course, being cryptocurrencies, gold-backed tokens also come with the benefits of decentralization, much like any other crypto play. So, which gold-backed tokens are the best cryptos to buy to hedge against a turbulent year for fiat? Consider these names:
- Paxos Gold (PAXG-USD)
- Tether Gold (XAUT-USD)
- Perth Mint Gold Token (PMGT-USD)
Gold-Backed Cryptos to Buy: Paxos Gold (PAXG-USD)
When it comes to gold-backed cryptos to buy, there is no token with more name recognition than Paxos Gold. The PAXG token is one of the oldest gold-backed cryptos on the market as well as one of the largest projects in terms of market capitalization. Its $438 million market cap makes it one of the largest cryptos in general.
Paxos is a token network based on the Ethereum (ETH-USD) chain. The project came to prominence in late 2018 with the launch of the Paxos Dollar (USDP-USD), a stablecoin pegged to the U.S. dollar. In 2019, it then launched PAXG. The PAXG token is supported by the project’s reserve of gold stored in Brink’s vaults.
One of the interesting parts of the Paxos Gold network is that, thanks to blockchain technology, one can track their gold to an exact location. Holders can search for the exact serialized gold they own on the Paxos website by supplying their Ethereum address.
All of this is fine and good. Most of all, though, PAXG is particularly appealing because of holders’ ability to stake the tokens for passive income. While the token is fine for buying and forgetting about, it’s even better for buying, staking and forgetting about. PAXG can be staked in several different DeFi pools.
Tether Extends Store of Value Offering with Tether Gold (XAUT-USD)
While you may not have heard of Tether Gold before, you’ve most likely heard of Tether (USDT-USD), the largest stablecoin in the world by market cap. In fact, USDT isn’t just the largest stablecoin — it’s one of the largest cryptocurrencies in the world, behind only Ethereum and Bitcoin (BTC-USD).
After making waves with its Tether stablecoin, this project is taking things to the precious metals sector with the XAUT token. Like Paxos Gold, XAUT is an Ethereum token. It has one ounce of gold underlying each token. Also like PAXG, holders can track their real-life gold assets by supplying their wallet address on the Tether website.
Tether contends that, by being linked to the blockchain, XAUT is revolutionizing the way investors trade gold. Linking serialized gold to addresses and trading those assets on a shared global network, Tether and other gold-backed stablecoins remove much of the friction that comes with trading gold. Most notably, the gold never has to move location whilst under reserve custody.
Still, while this is true, customers will also have a slightly more limited range of options when it comes to staking their XAUT. The only network which offers passive yield generation through the token is the Celcius Network.
Gold-Backed Cryptos to Buy: Perth Mint Gold Token (PMGT-USD)
One of the oldest of the gold-backed cryptos to buy on this list, the Perth Mint Gold Token is also perhaps the least well-known. Launched in 2018, PMGT is the product of Trovio, an Australian tech outfit set on tokenizing all sorts of assets. Digitized gold is one of its first offerings.
As its name implies, the PMGT token is supported by a gold reserve kept under custody by the Perth Mint. The Perth Mint is the official mint in charge of producing the bullion for the Australian government.
Unlike XAUT and PAXG, investors in PMGT aren’t exactly buying tokenized gold. Rather, they are purchasing GoldPasses, a certificate by the project. Each of these GoldPass certificates then represent one ounce of Perth Mint bullion.
However, one of the most interesting developments from this GoldPass feature is that users have an option to redeem their GoldPasses in exchange for real gold. So, if one were to trade in their PMGT, they can redeem one ounce of gold for each token. This gold is then shipped from the Perth Mint to investors’ doorsteps.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.