In the financial world, there are still financial experts skeptical about the long term future of blockchain and its application like cryptocurrencies and smart contracts.
Even though the technology has been around for a decade now, it just won’t find favor still in some quarters. However, there is a storm brewing in the financial markets. On September 12th, the Central Bank of Europe announced it is re-introducing quantitative easing reacting to its already negative interest rate. This is followed by the U.S. Federal Reserve also bringing down its interest rate by another quarter-point six days later.
Top investors are suggesting turning to gold as a way out of a potential mess, especially with the fiscal war going on in the background between superpowers like the U.S., Russia, and China. However, this poses a problem of where to buy, transact and store gold, for people trying to key into this idea of investing in the shiny metal to evade economic instability.
The simplest way to buy gold is going through mining stocks, gold futures or exchange-traded funds. However, in a scenario where the organizations holding or transacting these gold contracts go under then all the value of customers’ contracts goes down with it. That is not all, there are also cases of buying counterfeit or being exploited by those managing the contract.
Blockchain technology has always been hyped as the magic potion for a lot of issues even beyond its space, but one function it does with aplomb is the accounting transparency of contracts.
By leveraging this, companies are opening up new blockchain business opportunities tied to gold investment. Companies like PAX Gold, OneGram, and Digix Gold Tokens are creating gold smart contracts based on blockchain and linked to real gold stored by third parties or banks.
These smart contracts contain the data certifying that the gold been stored with a third party or bank is of sure purity (99.9%). It is also insured to protect its value against a series of liabilities or damages. This ensures the value of the gold has a guarantee with support against any unexpected incidents. All this information is written into the digital gold smart contract that is then secured on the blockchain network.
By migrating to the blockchain, gold is freed from all physical limitations attached to its use before. Now, it can benefit from the versatility digital assets are known for, like the ability to be moved, traded or divided into smaller units with a little overhead cost. To access your asset physically, all the customer needs to do is provide proof of identity (private keys) at the organization where storage occurs.
The combination of blockchain incorruptibility and gold appealing scarceness opens up new blockchain business opportunities for a very secure, transparent, and liquid financial tool that is very useful for an investor looking to evade the effect of currency devaluation.
This gives investors and customers the means to protect their savings. By turning gold into a tokenized asset through the use of smart contracts, sellers obtain quick access to a global market. This ensures that tangible assets such as gold are now available on crypto exchanges, presenting new blockchain-based business opportunities for gold investors.