A gold-backed digital currency, Global Gold Cash, has added gold reserves with a total in-ground value of $120bn with the addition of a large gold mine in Africa. And with disruptive potential to both the stablecoin market and the mining industry, the blockchain gold system is likely to see considerable future support.
Developed by Goldlinks, a global gold industry blockchain alliance, Global Gold Cash (GGC) is a token that is operated on the Ethereum blockchain.
Each GGC token is backed by 0.01g of gold, meaning 100 GGC is equivalent to 1g of gold.
This backing has allowed the token to be used for transactions not normally associated with cryptocurrencies, with Goldlinks claiming that GGC is the “first gold-backed digital currency to be used for international trade settlement and commerce”.
Taking on the stablecoin market
The blockchain gold technology is one of a growing number of stablecoins.
These are cryptocurrencies that are designed to avoid the wild fluctuations in value associated with Bitcoin and similar, because they are pegged to traditionally stable assets.
This is usually a fiat currency, as is the case with the Gemini dollar, a cryptocurrency pegged to the US dollar.
However, Global Gold Cash’s tethering to gold makes it a more stable option, particular in current climates where a global recession is feared.
The potential of blockchain gold for the mining industry
Notably, Goldlinks also provides an appealing solution for the mining industry, which can struggle when the value of resources fluctuate.
Because GGC is pegged to gold, it requires Goldlinks to hold adequate gold assets to back every token issued, which is why the company is partnering with gold mines to make this a reality.
The most recent partnership, for example, saw 520 tonnes of gold added the Goldlinks’ reserves.
This is important for the blockchain gold company, but it also proves valuable for mines, which are expensive to operate regularly.
For small and medium-sized mines, which typically are unable to raise funds in the manner large mines can, this can mean interruptions to operation and resources left in the ground.
But Goldlinks aims to resolve this problem with Global Gold Tokens (GGT), a second token that allows Goldlinks users to invest directly in mines.
Through the blockchain gold company, mines can sell equity to individual investors using GTT, giving them rare direct access to market.
This not only makes it easier for smaller mines to get market access, but also allows lower-level investors the chance to invest in this field.
“Goldlinks’ gold digital currency solution puts mine owners and investors in direct contact, helping the latter to generate returns on small equity stakes and reap rewards across the gold value chain,” said the company.
“Going forward, this development could revolutionise the gold industry and maximise benefits for both producers and consumers.”