For most of our history, gold has played an important role as money. The first gold coin was struck around 550 BC and has retained its value even after the introduction of paper. The US dollar has exhibited a long history of fluctuating through periods of convertibility and non-convertibility to metals throughout its history. Specifically, the US dollar has been a fully metal-backed currency for 124 years, a quasi-metal-backed currency for 39 years, and a fully fiat currency for 58 years of its existence.
So why is gold good money and what makes sound money? No currency is perfect on all levels of function and all currencies possess certain trade-offs. There are three main functions of a currency: a medium of exchange, a unit of account, and a store of value. A store of value is a mechanism so that wealth can be preserved with some predictability or knowledge about its future value. A medium of exchange is an intermediary to exchange products or services through that is more efficient than the primitive barter system, and a unit of account allows for a standard of measurement of the value of goods or services.
Gold is an excellent store of value and has a relatively stable predictability of value based on its historic performance and price stability. Gold works as an efficient intermediary to exchange products through, although physical gold can be heavy and not as fungible as cash, tokenized gold is both lightweight and fungible. Gold is also a great unit of account, since its value can be measured in weight. Gold is considered sound money because it is durable, divisible, transportable, fungible, and non-counterfeitable.
TruGold is even better money than physical gold, considering that it is essentially gold enhanced with blockchain technology. Relative to physical gold, TruGold is more durable as the physical gold that backs it is locked in third-party vaults for safe-keeping, it is super divisible and can be fractionalized in seconds, it has no limitation in transportability or fungibility as physical gold has, and it cannot be counterfeited since it is secured by cryptography. The gold that backs it cannot be counterfeited either since it is audited by third-party vaults for its quality and authenticity.
In countries like Venezuela, gold and cryptocurrency offers protection against devalued government currency and hyperinflation. However, high volatility of digital assets and huge price fluctuations may be unattractive to investors and warrants the development of stable cryptocurrency based on the gold standard.
Goldchain takes gold assets that live outside of the blockchain network and allows them to be traded on the EOS blockchain — a public electronic immutable ledger. Gold is accounted for, physically stored, and electronically minted for blockchain distribution and day-to-day transactions. Many digital assets have high volatility with large price fluctuations occurring around fear, hype, and government regulation. Goldchain pegs physical gold to digital currency which may provide lower risk than other digital assets.
Goldchain, with its TruGold token is creating the gold market of the future. The Goldchain platform directly links responsible gold producers to custodian vaults, market makers and dealers so that the trading process can be more efficient. Goldchain enables users to trade gold and other precious metals for digital assets cryptographically, efficiently, and in a highly liquid manner.
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