Gold, in a brilliant moment: how to invest in the metal through cryptocurrencies

In the world crypto, most gold-backed crypto assets are technically standard ERC-20 tokens. This means that they are derivatives built son the Ethereum blockchain. And some of the options available to invest in cryptos tied to gold are:

• Paxos Gold (PAXG)
• Perth Mint Gold Token (PMGT)
• Digix Global (DGX)
• Tether Gold (XAUT)
• Meld Gold by Algorand

These are some of the options available on the market. Each one has its characteristics and particularities, so it is important to carry out a thorough investigation before making any investment decision.

As said, the gold-backed cryptocurrencies offer certain advantages, such as stability and ease of transaction, because they are stablecoins, but, there is always a level of risk inherent to any investment, so it is advisable to consult with financial advisors or investment experts before making any financial movement.

Cryptocurrencies and gold: how to acquire them

As he explains Santiago Amatfinancial youtuber expert in cryptos and teacher, to Ambitto acquire these cryptocurrencies, you can deposit Argentine pesos on Binance or make peer-to-peer (P2P) exchanges through that exchange. For example, you can buy USDT with Argentine pesos and then convert them to PaxGold.

“Currently, there is also the option of exchanging pesos directly for PaxGold through a swapbut in my case, I prefer to do it through P2P, since they usually have more favorable prices”, Amat maintains.

For his part, Nicholas Olivefrom the Rudolph Research team, added in statements to this outlet that Pax Gold (PAXG), the token Issued by the Paxos Trust Company, “it is one of the best-known gold-backed tokens.”

The company claims, according to Olive, that this token is secured by physical gold stored in warehouses in London. In addition, Paxos Trust Company is regulated by the New York Department of Financial Services, “which provides some security and support for investors.”

Amat also points out that with PaxGold you can trade and make physical payments using the stablecoin, adding: “You can even exchange it for the equivalent amount of physical gold and have it in a bank in London, as long as the required amount is met at a ingotwhich is 5 kilos”.

Besides of goldthere are other options to invest in metals through cryptocurrenciesadds Amat: “One of them is KAGa silver-backed cryptocurrency, known as Kinesis Silver.” Like PaxGold, each unit of KAG represents one ounce of silver and is stored in secured and audited vaults.”

Gold and cryptos: risks and benefits of investing

Now, as for the risks associated with gold-pegged stablecoinsThere are two aspects to consider. In the first place, illustrates Amat, the risk is not to store them “in a safe place”. This is because if they stay on an exchange like Binance and “it experiences a bankruptcy, there is a possibility of losing all the money. Although unlikely to happen, it is a risk to be aware of in the stock market. cryptos”.

And he recommends: “One way to reduce this risk is store your cryptocurrencies in a private walletwhere you are the owner and have full control of your assets”.

Olive expressed himself along the same lines, adding that among the disadvantages found in this investment is the system noveltywhich has not been sufficiently tested and is “more prone to cyber attacks at the level of networks and wallets”.

A universe unknown to many

“It requires a greater knowledge of the ecosystem to keep us safe and secure from malicious attacks on our wallets. Using a cold (offline) wallet is always more secure in terms of custody, but it also requires a bit more knowledge to feel comfortable using this type of wallet,” the Rudolph analyst warned.

Now, about the advantages, the analysts consulted by Ambit They pointed out that investing in these cryptocurrencies as PaxGold and Kinesis, They offer security by being backed in precious metals. In addition, that doing it through tokens offer the flexibility and ease of accessing gold without the risks associated with physical holding of the metal, such as theft, loss, illiquidity, the spreads between buying and selling, the authenticity of the gold, transport and storage, among others.

“Tokens give us the advantage of the smart contract infrastructure that surrounds themwhich allows us to make payments, establish guarantees in a decentralized way”, recalled Olive.

Amat, for his part, recalled that it is always better to migrate to a private wallet when you have these types of investments. While he “trusts Binance”, he recalled an old saying that is repeated among investors: “If you do not have the private keys, you are not the true owner of the cryptocurrencies. So it’s important to be in control of your assets.”

Investing in precious metals is a good option to protect yourself from the inflation and the devaluation. make it through cryptocurrencies It offers some advantages such as trust and security. However, you must take into account the risks involved and always seek advice before making a decision.

Source: Ambito