Gold Bullion International, a precious metals provider, announced in a statement Tuesday that it was opening as a live gateway on the Ripple protocol, creating a new gold-backed cryptocoin.
That currency, XAU, is effectively a token representing physical gold with all of the ease of transaction inherent in cryptocoins. Or, as the Ripple blog puts it, “You are buying gold balances issued by GBI that are backed by and redeemable for physical gold bullion.”
This has two key effects, the statement says:
- Gold becomes easier to trade.
- Gold can be spent anywhere Bitcoin is accepted via the Ripple protocol.
“Ripple changes the dynamics of value, allowing for a real-time market that can instantly trade between gold, currency, mobile minutes, and more," GBI’s co-founder and CEO Steven Feldman said. "Our integration into Ripple allows us to continue our push into digital currencies by enabling investors to now buy digital physical gold."
The Ripple protocol acts as both a payment system and exchange. This means coins on that protocol can easily convert from representing one store of value (e.g. gold) to another (e.g. Bitcoin).
GBI has set an annual storage fee of 0.5% of a user’s gold holdings, which are kept in one of six vaults (“non-bank,” the Ripple post notes) around the world in New York, Salt Lake City, London, Zurich, Singapore, and Melbourne.
The XAU can be redeemed for gold, as well, portioned in 1-oz. increments. Potentially interested users can sign up to buy XAU at RippleTrade.com.
The ‘gold-backed’ trend
The announcement from Ripple and GBI follows news that another gold provider, Anthem Vault, had launched its own cryptocoin, called Independence Coin, in mid-July.
As Cointelegraph reported on July 17, Independence Coin, or INNcoin, is an X11 proof-of-work coin. However, the coins are “backed” only by 100 grams of gold, which is stored at a vault in Salt Lake City. In other words, each INNCoin is backed by 1/100,000th of a gram of gold meaning someone can pay Anthem 100,000 INNCoins and receive 1 gram of gold in their Anthem Vault account. So, really, trying to compare XAU and INNcoin is an apples-to-oranges problem.
That didn't stop Bloomberg Businessweek which covered both of these coins Wednesday, as well.
“It’s all the convenience of Bitcoin (to the extent there is any convenience in using Bitcoin) without the Bitcoin risk,” Businessweek's Joshua Brustein concludes in the piece. “All you have to worry about are the massive fluctuations in the price of gold.”
Did you enjoy this article? You may also be interested in reading these ones:
- Gold Rush: MinaCoin Cryptocurrency Backed by Gold
- Peter Schiff: Bitcoin vs. Gold
- Good as Gold: Canadian Bitcoin Exchange Opens Gold Trading
- Pure Gold Physical Bitcoins Minted in China
Do you want to read Cointelegraph from your mobile device? Then go to our Indiegogo campaign, contribute, collect your prize and enjoy the mobile app!