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Topic
It isn’t just China, the BRICS nations, or Zimbabwe moving toward gold-backed currencies. Digital cryptocurrency assets are going gold, too.
New Uses for Gold Increase its Value
On June 17th, 2024, Tether issued a press release announcing “…the official launch of Alloy by Tether, a ground-breaking tethered asset backed by Tether Gold”.
Tether is one of the oldest and most well-established firms operating in the world of cryptocurrency. It has always been a marketplace leader and innovator in the crypto sphere. Tether is the issuing company of USDT, which, measured by market capitalization, is the largest crypto stablecoin. Therefore, any major actions that the company takes – such as the development of new digital assets such as Alloy – deserves careful attention from investors.
Alloy by Tether
This latest creation from Tether – Alloy by Tether – is designed to offer a new type of digital assets, ones which will mirror the price movement of reference assets such as gold. According to the company’s press release, the aim is to offer investors digital assets that will provide “consistent value and stability between the reference asset and its tethered counterpart”.
The first Alloy by Tether digital currency token being issued is aUSD₮, a stablecoin that is designed to track the value of $1 US. The aUSD₮ token is over-collateralized by Tether Gold (XAU₮), which is backed by physical gold stored in vaults in Switzerland. The aUSDT token represents a stablecoin that offers extra security by virtue of being backed by real gold.
Alloy users will be able to facilitate digital transactions by using Tether Gold (XAUT) as collateral to create aUSD₮ tokens. Thus, they can, for example, make digital payments without having to actually sell their holdings of XAU₮.
Alloy is the creation of two members of the Tether Group - Moon Gold NA, S.A. de C.V. and Moon Gold El Salvador, S.A. de C.V. According to Tether, aUSDT is just the first in a series of Alloy by Tether tokens that will be issued. Tether’s press release notes that Alloy has been developed as “an open platform that allows the creation of different tethered assets with broader backing mechanics, potentially including yield-bearing products”.
Alloy by Tether smart contracts are deployed on the Ethereum Mainnet. Users can mint aUSD₮ tokens by depositing Tether Gold (XAU₮) as collateral, using Ethereum-compatible smart contracts. The aUSD₮ smart contract, according to Tether, will ensure transparency by maintaining accurate tracking of all XAUT collateral and minted aUSDT tokens.
In his statement introducing the new crypto token, Tether CEO Paolo Ardoino said, “We are thrilled to announce the launch of Alloy by Tether, introducing a class of digital assets backed by gold and tethered to a reference fiat currency…this innovative solution marks an exciting milestone, and we eagerly anticipate how it will interact with the rest of the market.”
Crypto Goes Gold - Tether’s New Gold-Backed Digital Asset - Conclusion
In an increasingly uncertain and unstable economic world, investors are turning more and more to “real money” assets such as gold. They are looking for a way out of having their whole financial house dependent on fiat currencies that appear more flimsy and less reliable as a store of value with each passing day.
I think that Tether’s creation of a gold-backed crypto asset is just one more indication of the global movement back toward gold. Further, I would not be at all surprised to see additional cryptocurrency assets backed by gold enter the marketplace in the near future.
- J.B. Maverick
Sources:
Free Gold Guide
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