What is digital gold in cryptocurrency?

Cryptocurrency enthusiasts often claim that digital currencies and tokens are not correlated with stocks and can provide a safe haven amid stock market crashes. Cryptoassets are supposed to act like “digital gold”, serve as a hedge against equity risk and help investors overcome these recessions.

What is digital gold in cryptocurrency?

Cryptocurrency enthusiasts often claim that digital currencies and tokens are not correlated with stocks and can provide a safe haven amid stock market crashes. Cryptoassets are supposed to act like “digital gold”, serve as a hedge against equity risk and help investors overcome these recessions. A digital gold coin (DGC) is an electronic form of money that is backed by gold reserves held in vaults by private agencies. Holders of any particular DGC can pay each other in gold or in monetary units representing the gold physically held by the issuing company.

Each of these companies, or exchanges, maintains a physical reserve that reflects 100 percent of customer accounts. The first DGC appeared in the mid-1990s, led by E-Gold. Bitcoin advocates also use the image of a gold token to reinforce the perception that it is digital gold. Supporters of investing in gold and gold coins have long promoted the universality and invulnerability of gold to the risks of a single national economy.

For now, gold is still gold as a hedge against financial uncertainty, and bitcoin is still bitcoin as a speculative investment.

Evan Stulce
Evan Stulce

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