I investigated the hard money movement a decade ago, when Ron Paul was running for president and it looked like the US dollar, backed only by the full faith of the government, was going to be imminently destroyed. In 2008, it seemed like only a return to honest money would allow for real economic growth, and every fiat system was doomed to hyperinflation. Hard money economists seemed to see the Great Recession coming, and I found myself cheering a return to the gold standard (however fanciful the idea of the Federal Reserve handing that power over voluntarily might be).

While still wary of the dollar, I’m much more comfortable with the current system. It’s incredible that the Fed has avoided hyperinflation for 100 years, even if the dollar is only worth about 3% of what it was against gold 100 years ago. But the US dollar being backed by the “full faith and credit of the US government” is not a little troublesome.

Regardless, instead of pushing for a gold dollar, I’m much more interested in this free market of monies that is emerging from blockchain technology. There is an ever growing number of currencies that are offering competition to the US dollar (and other sovereign money), led by Bitcoin, but also including DAI, Monero, ZCash, Tether, SBDs, and more. Competition is good, as it drives prices down and quality up. In this case, it may help the world ease off of the US dollar as the world reserve currency, as people begin to trust the trustless systems that require only an internet connection and a smartphone to use.

Just another reason why I’m excited about Digix Gold.

Digix Gold (DGX) is the closest thing to a free market provided gold money that we’ve seen in the past century. One DGX token is one gram of gold. It is fungible, and it is divisible to fractions smaller than a penny.

Digix: next to gold in hand, it’s your best bet for a free market gold standard.

It is possible economies pop up that are run solely on DGX. What might the effect be on a country like Venezuela?

Gold bugs have traditionally been “gold in hand” types, wary of technological solutions with offsite storage, but gold in hand is still very difficult to store and spend. DGX is not. Ethereum blockchain transactions take about 15 seconds, so DGX coffee purchases-that’ll be .05 DGX, sir-are possible.

DGX will bring a whole new class of users to Ethereum, hard money fans, who have thus far avoided the blockchain due to the lack of a hard asset backing tokens.

DGX requires a certain amount of trust in third parties, like anything. In Bitcoin, this trust is placed in wallet providers, exchanges, and the program itself. There is a preponderance of evidence that Bitcoin is safe, and that major wallet providers have created bug free software, but there is trust nonetheless. In the case of Digix, the Proof of Provenance protocol and third party audits of gold in storage help users trust that the DGX tokens are backed by 100% gold. And DGX holders can travel to Singapore, where their gold is held, and request delivery…although I imagine savvy gold dealers will accept DGX as payment in other areas as use increases.

Many gold bugs are also fans of silver. There will most likely be a DGX silver token within a year or two, depending on how quickly the DGD governance token holders are capable of voting on what to produce next.

Finally, DGX will be immune to the swings of Bitcoin and other cryptocurrencies. Gold is far more stable than Bitcoin and Ethereum, giving more conservative buyers a place to actually store value

 

 

Comparing Bitcoin and Gold Volatility…no contest.

Whether or not gold is the best choice for a money in the 21st century remains to be seen, but we actually get to run that experiment now. DGX is a fundamentally different token from all other cryptocurrencies to date. It offers more options for people who may not have originally been interested in blockchain technology, and want to see what free market money might look like. With DGX gold, it’s looking pretty good.

Disclaimer: I am long DGD.

-Jeff

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