How is DGLD different from other stablecoins?
- Stablecoins are crypto tokens usually collateralized by fiat money or exchange-traded commodities - in some way, usually leashed to the financial system.
- DGLD is not directly linked to any currency, bank (central or not) or other cryptocurrency product. Simply physical gold.
- Many stablecoins are built on-top of 3rd party blockchains such as the Ethereum blockchain, in the case of ERC-20 compliant tokens, for instance.
- DGLD operates on its own chain. It is the only stablecoin in the world to stand on its own, while still leveraging the power of the Bitcoin blockchain to secure the DGLD network.
- At all times, your DGLD is mapped to (allocated) physical gold, unlike other fiat and commodity-based coins which are simply 'backed' by, or redeemable for, X amount of the underlying asset.
A 'stablecoin' is a cryptocurrency which is 'pegged' to a stable asset, and often redeemable for the asset which they are pegged to. The stable asset is usually a currency (or commodity) which ideally doesn’t experience extreme fluctuations (is stable) in value - for example, USD - fiat money, or exchange-traded commodities like precious metals.
As a result, stablecoins offer a haven from the volatility associated with many crypto-assets. With stablecoins, consumers are promised the advantages of cryptocurrencies (a decentralized system and ledger, with fully verifiable transactions and high levels of security) - without the volatility and uncertainty that can sometimes be associated with crypto.
To date, most stablecoins have been linked to an asset or structured in a way in which they become subject to a number of regulatory classifications; and subsequent constraints.
DGLD is not intertwined in this same legacy structure; nor, under Swiss law, is it subject to the same regulatory constraints as synthetic gold investments (e.g. exchange traded products like ETFs). It falls under category 5 of FINMA’s stablecoin taxonomy - ‘linked to commodities with ownership rights.’ In other words, if you hold a DGLD token, you hold title to the gold - no web of intermediaries and not subject to any prudential licensing requirements under Swiss law.
This means that the value of DGLD is not leashed to any currency or subject to the whims of a central bank, regulator or other state-actor. 1 DGLD truly reflects the physical gold holdings sitting in a vault, on your behalf, at any given time.*
*The value of one DGLD is equivalent to one tenth of a Fine Troy Ounce LBMA gold bar at the time of creation; over time, there is a small fee component subtracted from each DGLD.