Dean
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For many of us buying into cryptocurrencies, we are more than aware of the volatile nature of these blockchain investments. It can be the reason we make such huge profits, while also being the reason we keep such a close eye on our investments, should the market start to stumble from time to time. Crypto evangelists and even mildly curious investors are generally of the opinion that at least a couple of cryptocurrencies will become the default way to trade in the not too distant future, but until then, many of us are left with a difficult sales pitch when attempting to explain our fascination and backing of what is still quite a niche topic. When speaking to those who are used to investing in, for example, stocks and commodities, will it ever be possible to get them to take the plunge and dive into the cryptocurrency pool? Well, the answer to that may very well come in the form of something far more ‘up their street’.

The early days of digital gold

Those of you who were looking into digital currencies back in the early days may remember something called E-gold. This digital currency allowed users to buy allocations of gold, and trade it over the internet. With the price of gold rarely going down, this modern way to invest in a currency was a trailblazer in the industry that unfortunately fell victim to fraudsters, hackers, and criminal cybergangs. Due to its early success, malware and phishing scams became prevalent, while systemic problems involving Romanian and Russian gangs funnelling stolen money through E-gold transactions seamlessly back to the criminals at breakneck speed spelt the end for the innovative new currency. While E-gold didn’t survive these stumbling blocks, the idea behind it has evolved slightly in the recent cryptocurrency markets, and this new version is far superior to its older sibling.

Where E-gold let itself down, was mainly in the security department. Cryptocurrencies, backed by blockchain technology, do not fall prey to the same fraud issues that E-gold did. New gold and silver-backed cryptos such as Kinesis allocate real gold and silver to digital tokens using the same sort of blockchain technology that Bitcoin uses. Not only is this far safer than the way E-gold traded, but it also remains privy to the same positive attributes that trading in gold and silver has always been known for. So with gold and silver-back cryptocurrencies, you are leveraging the less volatile and rarely devaluing nature of trading these commodities, while also enjoying the security that is associated with blockchain technology. A win-win situation, if ever we saw one.

Stability breeds trust

Cryptocurrencies, in general, have found their volatility to be the most problematic aspect of their success. Early adopters withstanding, many investors are hesitant when it comes to putting money into crypto, and are waiting for one or two of the new digital currencies to stabilize before diving into the modern world of blockchain-based money. Gold and silver-backed cryptocurrencies could completely change the way crypto is looked at in general, breeding a much healthier attitude towards the currency type in general. A good currency needs to be relatively stable (after all, people need to be able to save and plan for the future if they are to use this currency widely), and it may very well be the likes of these commodity-backed cryptos that turn the whole scene into a viable one in the eyes of the average investors. When commodity-based crypto becomes as well known as the likes of Bitcoin, we may well start to see the whole crypto scene benefit as a side-effect. Having a more stable alternative to Bitcoin, Ethereum and Ripple could also mean that more money stays within the crypto economy, rather than being piled back into more traditional bank accounts during moments of fluttering value. Could this also lead to more commodity-based cryptocurrencies in the future? There is no reason to think it wouldn’t. In a time when many investors are worried that we are on the precipice of another global recession, any stability brought about by commodities that hold their intrinsic value can only be a good thing. It seems the days of trading in gold and silver have not gone away, they have simply evolved.