DGLD token holders have a digital proof of ownership in physical gold that is stored in Swiss vaults. Despite many investors valuing an environment where gold is tokenized, a renewed demand in Gold this year has investors seeking physical ownership as well. A consortium of companies is now giving DGLD token holders the ability to invest in digital gold, or redeem DGLD tokens for physical bullion.
DGLD Token
Back in 2019, a consortium of companies launched DGLD, which is a gold-backed token that operates as a side-chain of the Bitcoin network. The consortium of companies involved in this launch were CoinShares, MKS, and Blockchain ( the wallet service provider ). By investing in DGLD, the investor has digital ownership in investment grade gold that is stored in Swiss vaults, and secured using Bitcoin.
Digital And Physical Ownership
By leveraging tokenization, digital gold has made more than a splash in traditional markets. In a world that is going completely digital, many investors were looking for alternatives pertaining to safe-haven assets. Investing in physical gold can be a tedious process, especially during the verification and delivery process. Tokenization changed this, and gave investors a way to invest in safe-haven assets with a smartphone.
For investors seeking a hybrid model, DGLD token holders can now either invest in gold digitally, or they can redeem their tokens for physical bullion. According to a press release by CoinShares, DGLD token holders can redeem their tokens on GOLD AVENUE, which is a retailer for precious metal markets. MKS PAMP GROUP is the entity behind the retailer. As discussed above, MKS was involved in the original consortium that brought DGLD to market.
In the release by CoinShares, Daniel Masters ( Chairman ) stated that:
“DGLD offers peace of mind to our customers, combining the security of BTC with the stability of gold. Customers value the flexibility DGLD provides, having the ability to switch between the physical and digital ownership. Settling purchases in DGLD on GOLD AVENUE is a way to achieve this with ease and fluidity.”
Why Would Investors Value This?
Tokenizing gold has always sounded like a great idea, but many investors questioned the legitimacy behind it. It is great knowing that your digital gold is backed by physical gold, but what does the redemption process look like? Investors involved in other forms of digital gold have a difficult time answering this question. DGLD is streamlining the process by offering a user-friendly payment gateway, and giving users the ability to easily redeem for physical gold through GOLD AVENUE.
This also makes sense when thinking about diversification. DGLD allows investors to essentially decide whether they want to invest in gold digitally or physically. If you own DGLD right now, you can redeem half of it and have a 50% allocation in digital form, and 50% in physical form. During times of market uncertainty, investors may value an arrangement like this for various reasons.
The DGLD token continues to provide gold investors with convenience and security, and is ultimately changing the way risk-averse investors approach the precious metal markets.
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