XAUt, Tether’s Bid to Return to the Gold Standard
- The physical gold-backed stablecoin seeks to digitally revive the abandoned pre-1970s monetary system.
- The firm claims that if Bitcoin and gold become the world’s top neutral reserve assets due to inflation, Tether Gold:XAUt will also benefit.
Tether, the company that backs USDT, the world’s largest stablecoin, has renewed its commitment to the Tether Gold:XAUt cryptocurrency with the premise of returning to the monetary system based on the gold standard, which was abandoned in the early 1970s.
According to the company, the XAUt token, which would be backed by physical gold stored in a vault in Switzerland, represents a new approach to digital gold. The issuer states that its intention is not to compete with Bitcoin, but with the US dollar because it is the best stablecoin.
Divisible and Tradable Digital “Gold”
XAUt was launched in January 2020. According to its white paper, each token is equivalent to one troy ounce of a London Good Delivery gold bar. Unlike physical gold, the stablecoin is divisible so users can choose the amount they want to buy or sell. The minimum amount supported for purchase or storage is 0.000001 XAUt.
According to Tether, its trading represents a return to the gold standard, since it allows holders to store or transact as if they were doing it with gold. The difference with gold is that it is easier to exchange, save and mobilize, due to its digital nature.
The monetary system based on the gold standard remained in force until the early 1970s. It was then that the U.S. President, Richard Nixon, decided to abandon the fixing of the value of the dollar using gold as a reference. Since then, the floating exchange rate system has been implemented.
“XAUt allows users to easily convert their savings into gold via XAUt tokens. This allows effective saving in gold, as during the gold standard”, states Tether. The company mentions a number of benefits of this system including the preservation of purchasing power currently destroyed by rising inflation.
Laguna Labs recently launched the first cost-of-living cryptocurrency called Nuon Flatcoin. It is a new type of stablecoin linked to inflation rates that allows holders to maintain purchasing power.
There are also other cryptos that pursue the same objective as XAUt and are linked to monthly or annual inflation indices. They include Frax Price Index (FPI), Volt Protocol (VOLT), and Hedging Coin (IHC).
Tether Suggests that XAUt is Better than Gold
According to Tether, Bitcoin is destined to become “the world’s primary neutral reserve asset.” If this were to happen, both BTC and gold would benefit.
“Gold has historically been the standard for an asset that provides protection against inflation, and while it now shares that role with Bitcoin, it’s unlikely gold will stop being used any time soon,” Tether maintains.
But the company notes that due to the difficulties of storing, verifying and trading gold (unless you trade on the stock market), its digital token backed by physical gold is easier to manage.
On the Flipside
- So far, the presence of the gold backing the Tether Gold:XAUt cryptocurrency has not been verified on the books by a full audit. Its price on Tuesday at 10:23 am (GMT-4) was $1,667.77, according to data from CoinMarketCap.
Why You Should Care
The constant increase in inflation globally has shown that traditional stablecoins are insufficient to preserve the purchasing power of consumers. That is why new projects are emerging in the crypto space that try to satisfy this need.
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Read more: https://dailycoin.com/xaut-tethers-bid-to-return-to-the-gold-standard/
Text source: DailyCoin.com
