Cryptocurrencies are developing rapidly, and asset-backed cryptocurrency is a new concept that most cryptocurrency fans are yet to understand. So, what are asset-backed tokens? Today we’ll learn more about it.
What is an asset-backed cryptocurrency?
Just as the name suggests, asset-backed cryptocurrencies are digital coins that are tied to an existing asset with economic value. These cryptocurrencies are used to digitize an asset and store records on a blockchain instead of using traditional paperwork.
Among all cryptos, we can highlight 5 coins that we should pay close attention:
- Digix (DGX). Digix Gold was founded in 2014 by Digix. Each coin represents 1 gram of 99.99% LBMA standard gold.
- PAX Gold (PAXG). PAX Gold (PAXG) is a digital asset where one token is backed by one fine troy ounce (t oz) of a 400 oz London Good Delivery gold bar, which is stored in Brink’s gold vaults.
- Petro (XPD). This cryptocurrency launched in 2018, was issued by the government of Venezuela. The petro coin is supposed to be dependent on Venezuelan reserves of oil, gold and diamonds.
- Power coin (PWR). This currency has been termed as the most liquid asset backed crypto token of today. Its investors are allowed to convert their assets, such as cash, bonds, gold and diamond, into PowerCoin tokens.
- Tether (USDT). This digital asset was initially backed by equivalent reserves, and now these tokens are fully backed by Tether’s reserves. The idea behind Tether was to create a stable cryptocurrency that can be used like digital dollars, or “stablecoins.” USDT is used as a way to hedge against crypto market volatility due to its stability.
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