Over the past year we have spent more and more time diving into the star of crypto resources from a technological and investment point of view. Of course, my first knowledge in the space was the ‘gateway crypto’ Bitcoin (BTC), but we fast explored other crypto resources of many different types.
Through researching many different tokens, coins, platforms, and projects we found what areas made the most clarity to me as an investment:
· Dominant crypto assets that have a vast network outcome and already have thousands of people operative to make the record better every day and more valuable. Bitcoin (BTC) and Ethereum (ETH) are the transparent leaders here with network values of $150B and $86B respectively.
· ‘DAP’ (Decentralized Application) Development Platforms that offer new technologies, more choice in programming languages, regulatory advantages, pacifist income potential, or some other niche use box that can still grow significantly. Examples here embody Neo (NEO), Cardano (ADA), and Icon (ICX).
· Crypto Assets with loyal ’real world’ singular value. These are resources with subsidy from a earthy item with genuine singular value. In the future, this area should flourish, but for now, this is a singular lot. we am, however, long two such resources in the space: DigixDao (DGD) and Xaurum (XAUR).
The interest of crypto resources that can intentionally mix the technological and decentralized inlet of blockchain with the tangible subsidy of earthy profitable resources is obvious. we (and many others) trust this area of crypto is unfailing to be the largest in the space over time. Currently, several projects are starting down this road, but only a handful have made poignant swell or already charity a physically corroborated crypto. Below is a outline of two earnest projects; both using bullion in different ways to supplement value for their item holders.
This plan aims to emanate two forms of tokens (at slightest for the time being). One form of token (DGX) is corroborated by 1 gram of 99.99 percent LBMA customary gold. This token is not nonetheless available for purchase, but per the website is slated to be expelled by end of Q1 2018.
You might be seeking “Well that’s great, but because possess this crypto token when we can simply buy earthy bullion or buy shares in a bullion ETF such as SPDR Gold Shares (NYSE: GLD)?” Below are the advantages of bullion assembly the blockchain…
· Very little cost in appropriation entrance to bullion value. It can cost between 5-20 percent of the squeeze cost to acquire earthy gold, and if you want to sell it at some point, there can be a identical charge. Purchasing ETFs are much cheaper, but there is mostly a $5 to $15 elect to buy/sell. Fees for purchasing DGX shouldn’t be more than 0.3 percent depending on how you acquire the tokens.
· Storage/Tracking: If you buy earthy gold, there is possibly a cost for a financial establishment to store it or one contingency take it on themselves to guarantee the investment. If you squeeze an ETF, there is no storage issue, but many investors are skeptical, if pull comes to shove, one could take possession of your bullion through ETF form. It is also unfit to ‘track’ or know accurately what you possess through the ETF.
With DGX and blockchain record you always know accurately what you possess and where it is located; in addition, it is always ‘guarded’ by the blockchain. If you wish, you can take possession of your bullion in earthy form.
· Ease of transfer/purchases: If you possess a bullion ETF or a bullion bar/coin, you can't easily send this value to another chairman or squeeze products or other currencies for it. With DGX tokens, you can send the token to any other chairman on the world for little cost and very quickly. In addition, over time you might be means to make bland purchases through the value reason with your DGX tokens.
The other token available now through DigixDao is DGD. Owning this token is identical to owning shares in a association that sponsors a bullion ETF and subsequently earning dividends from giveaway money flows. With this DGD token, the owners also has a opinion in the altogether village and earns a apportionment of fees generated from the DGX tokens.
This plan is more of a loyal ‘currency’ than anything else. This is about as tighten as one could get to being back on the ‘gold standard’ with a spendable currency. The XAUR tokens are meant to be a store of value and/or a means of sell like Bitcoin and other fiat currencies with a integrate critical benefits.
First, each XAUR is corroborated by earthy gold, but distinct DGX, the ratio of bullion to XAUR tokens changes over time. And by the inlet of the village blockchain, the ratio of bullion per token should boost as more XAUR tokens are ‘minted’, bullion is purchased for the community, and tokens are burnt from transaction fees.
Per Rudi Potocnik at Xaurum, “When the marketplace cost [of XAUR] is aloft than the prolongation cost [currently $0.315], the marketplace is perfectionist new XAUR. Investors who buy at these levels [produce ‘excess value’] and that value is used to squeeze bullion and therefore boost the Xuarum bullion reserves.” Right now there are 127M XUAR tokens in existence, which are corroborated by 127kg of gold. Per the website, the ratio of bullion to XUAR tokens has increasing 227 percent over the past year due to marketplace demand. Transparency is very critical here too, with daily published bullion haven audits and invariably updated XAUR information available on the website.
This is a very engaging project, which has the intensity to be one of the few crypto resources with a loyal quantifiable singular value behind it, along with the awaiting for growth. In further to being a viable store of value, investment, and spendable currency, it looks to be a loyal ‘stable coin’ in the very flighty crypto space. During the 7 days finale Feb 6th, as the whole crypto space decreased in value by around 45 percent, XAUR tokens were up slightly. This is very impressive, but unsurprising as in times of highlight investors group to resources with loyal singular value and relations stability. Currently, the XAUR tokens trade for a little more than 3x the book value of the bullion that is subsidy each one. This reward is the market’s guess of destiny expansion of the bullion ratio per token.
In a sea of tokens and projects that reason little investment value within the crypto universe, these two earthy gold-backed resources could offer a singular event in a very renouned and sparkling space. That being said, these are still early theatre and singular investments that have a poignant volume of risk ,and any financier should do their possess investigate before creation a intensity squeeze of possibly of these assets.
Eric Mancini, CFP, CAIA is the executive of investment investigate and a resources confidant with Traphagen Financial Group (http://www.tfgllc.com). TFG is an eccentric RIA located in northern New Jersey. The author is LONG both DGD and XAUR.