Investors who do not want to use traditional financial instruments such as ETFs may be able to purchase gold-backed cryptocurrencies.
Because gold-pegged cryptocurrencies are issued on open, public, and permissionless blockchains, they are potentially investable by anyone with a cryptocurrency wallet and some funds in it.
Although few cryptocurrency exchanges are currently licensed to trade tokenized ETFs, many decentralized exchanges (DEXs) such as Uniswap now offer the trading of such gold-backed crypto tokens.
The second reason is that gold-backed cryptocurrencies is a great idea to use of gold as a means of payment. Cryptocurrencies are easily traded on a global scale due to their digital nature.
Because of its mass and weight, physical gold will always have high transaction costs. Gold-backed cryptocurrencies can be easily traded across global blockchain networks.
Gold-backed cryptocurrencies are an intriguing combination of gold, an ancient store of value, and cryptocurrency, which could represent new-age money. While many investors prefer cryptocurrencies backed by gold due to their higher physical value and ancient history.
The most popular cryptocurrency, Bitcoin, is not backed by any physical commodity. This fact has not been well received by all investors and citizens.
One of the most common criticisms leveled at Bitcoin is that its value is intangible and unbacked by anything of real, physical value. Because of their connection to physical gold, gold-backed cryptocurrencies are associated with a tangible value.
Some investors prefer to invest in a cryptocurrency backed by gold because of its physical underlying in gold. After all, gold has a longer history than cryptocurrencies, which is why some investors believe that the price fluctuations of a gold-backed cryptocurrency are easier to understand than those of a cryptocurrency without gold backing.