Investment idea: Earn on gold tokens

The trader told how to earn on cryptocurrency with a link to the price of gold

A popular TradingView (Age_of_Crypto) analyst told about opportunities to invest in crypto-assets with a link to the price of gold

It's been more than 35 years since The Economist magazine published a cover story titled "Get ready for a world currency" with the name Phoenix and the year 2018 minted on the coin. This magazine partly influenced the credibility of Bitcoin and cryptocurrencies, but many people don't know about the story until now. The first notable hype around cryptocurrencies happened just in 2017-2018, and the top of the cryptocurrency market capitalization of that period was formed on January 8, 2018. The magazine was published on January 9, 1988, it said that in 30 years people would buy goods online and all price tags would be listed in the new world currency.

Fiat currencies would go nowhere and it would be easier for nations to manage their economies. It is possible that the market maker took advantage of this, because thanks to this magazine, many people believed that in 2018 there was a new world currency and bought cryptocurrencies at the peak of the price.

The main Bitcoin network was launched on January 3, 2009, and today is already 2023, and calculations are still predominantly in dollars, some continue to believe that Bitcoin will eventually become the world currency. But there is another option. I believe that in the new world, currency hides ordinary gold but in a digitized or tokenized form.

In this variant, it can be divided into dust and instantly made payment, because the proof of its originality will be recorded in the blockchain. We believe today in the value of the Tether USD (USDT) stablecoin, which is issued in this way, on the blockchain and backed by real financial instruments. The capitalization of USDT today is 7% of the capitalization of the entire cryptocurrency market. Now Tether (USDT issuer) has more US Treasuries in its reserves than Australia, UAE, or Spain.

There is news that the BRICS countries are going to launch their own currency, and some sources believe that it will be linked to the value of gold or backed by gold reserves. In such a case BRICS comes to the exchange of goods and resources, it is practically a barter system of payments between the countries. Gold will act as a unit of measurement in mutual settlements. Thus, everything will return to the original idea when the dollar was backed by the gold reserve, but there is one big BUT.

The main break in the current paradigm will not be the shift to gold, but the consensus that will be built into the new payment system. This is where the basic understanding of what is a multipolar world, about which there is so much talk now, opens up.

The most suitable way to build such a payment system is to organize a blockchain with DPoS (Delegated Proof-of-Stake) consensus. This consensus algorithm was first developed by Dan Larimer in 2013 for his BitShares project. The DPoS protocol is also referred to as a form of "digital democracy". The difference between DPoS and the Proof-of-Stake (PoS) algorithm on which Ethereum (ETH) or Cardano (ADA) operate is the separation of network participants into block producers and voters. If we project this idea into a form of supranational digital currency, it turns out that citizens of countries elect a government and the government sets up a node to validate transactions. Sooner or later, elections will also take place on the blockchain, and such a consensus will become more transparent.

For such a payment network, for example, the architecture behind the EOS cryptocurrency would fit well, but it is clear that the government will not use the blockchains of existing cryptocurrencies. The new currency will probably be backed by commodities or raw materials, rather than the growth of any one country's economy. It will be a separate network where each BRICS member will hold a node (node) of the network. When the consensus will be that even if ONE participant (node) of the network confirms a transaction (not taking into account the sender), and all others are against it, and such a transaction goes through, it will be called a multipolar world. In such a network, money will not be frozen by the decision of just one party, as in the case of the dollar or the euro. This would be the creation of a new model, where the old one would simply become obsolete and no longer popular.

Digital gold

Since the 2008 crisis, central banks have been actively buying gold. There has only been one other time like this in history, before the decoupling of the dollar from gold backing. I've overlaid the bank purchases on a chart of the price of gold (see chart).

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Today, you can buy tokenized gold, such as PAX Gold (PAXG). Each token is backed by one troy ounce of London gold in 400-ounce bars stored in Brink's vaults. If you own PAXG, you own the underlying physical gold in the care of the Paxos Trust Company. Tether also issues tokenized Tether Gold (XAUt), but it is less trusted.

Trading plan

I believe gold is a more promising value saver than USD and Bitcoin for the coming years. Personally, I am moving away from USDT to PAXG as a stablecoin, with more understandable collateral.

Gold is trading at $1930 an ounce today. Short term I expect a rise to $2390. Based on the market trend channel, I do not expect the price below $1875 (see the chart).

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