Altcoin Spotlight: Tether Gold (XAUt)
Tether Gold has been popping up everywhere, and for a good reason, as it now sits around spot #31 on CoinMarketCap.com. But what is Tether Gold? And should you buy it?
Tether Gold is a unique cryptocurrency that combines the easy investing power of digital blockchains with the investment security of gold. Read on to discover everything you need to know about this tokenized asset, and whether or not you should invest.
What is Tether Gold?
Tether Gold is a new cryptocurrency project that is working to create a tokenized version of gold. The goal is to allow investors to add gold to their investment portfolios without having to worry about lugging around bricks of the heavy metal.
Basically, individuals who want to invest in gold can consider investing in Tether Gold instead, allowing them to keep their investments in a nice and tidy digital wallet.
How Does Tether Gold Work?
Tether Gold works as a tokenized asset. Basically, whenever Tether acquires more gold bars (which they store in a vault in Switzerland, by the way), they issue more Tether Gold tokens, which are available for purchase by interested buyers. When someone buys a Tether Gold token, they are purchasing that same amount of physical gold, just held by Tether on their behalf.
As you may notice, this is backwards from how stablecoins are created. This is because gold is a finite resource. That means Tether must physically possess the asset before they can sell it on the blockchain. Otherwise, they risk people buying more digital gold than they are able to back (sound familiar?). The price of Tether Gold fluctuates directly as the price of physical gold fluctuates. So, as the value of gold increases in global markets, so does the price of Tether Gold.
What is XAUt?
XAUt is the market symbol for Tether Gold. We believe this market symbol was chosen using the periodic symbol for gold, which is AU. It was combined with a t, for Tether, and an X to represent the fact that it is a token that represents an exchange for gold.
Is Tether the Same as Tether Gold?
Tether and Tether Gold are not the same. Tether is a stablecoin with a value that is matched to the US dollar. When an individual wishes to purchase Tether, an equal amount of US is locked up until redemption. Do note that investigations have revealed that the real backing of Tether is on a 75% ratio (not 100% as intended), which has caused numerous problems we will discuss later.
Tether Gold, on the other hand, is a tokenized asset—meaning the value of the token will change as the value of the asset does. One Tether Gold is associated with a certain measurement of gold (1 troy ounce of 99% gold as of the writing of this article).
Basically, the main difference between these two assets is what backs them and their prices. The price of 1 Tether should always be $1, while the price of 1 Tether Gold will fluctuate with the price of gold.
Who Created Tether Gold?
Tether Gold was created by Tether Limited Inc, the company behind the Tether stablecoin. Tether Limited Inc is owned by iFinex (the company also behind Bitfinex) and is located in the British Virgin Islands.
Tether was started by J.R. Willett in 2012 along with Brock Pierce and Craig Sellers. It is unclear if any of these men remain in control of the Tether project, and whether or not they worked to develop Tether Gold.
Should You Buy Tether Gold?
The truth is, Tether Gold is a fantastic idea, and we think the proclaimed execution is exactly what we would want in a tokenized gold asset. There’s just one problem—we don’t trust Tether.
Tether has a dark history of not backing their stablecoin on a 1:1 ratio as they claimed. In fact, multiple audits found that the true backing was closer to 75%. This creates a problem because if everyone wanted to cash out their Tether at the same time, it would cause the banks to crash—just like traditional banks.
The reality is, people use cryptocurrency to avoid the faults in traditional banks, and Tether has long chosen to perpetuate them rather than to solve them. Which is why, though we would love to trust they are running their Tether Gold token as proclaimed—we don’t.
We are very suspicious that at some point, Tether will be unable to purchase more gold (again, finite resource) yet continue to sell their Tether Gold token in the interest of showing growth. Then, individuals will be right back where they were with Tether—stuck holding an asset that is only backed by a fraction of what they think it is.
We especially worry because the vault is located in another country, and we aren’t sure what the US government will have to say about this, considering it has fined the company for dishonesty in the past. Honestly, if we trusted Tether, there would be no reason not to invest in Tether Gold. As it is, we recommend potential investors proceed with caution, knowing that the company behind this token has a history of legal troubles stemming from its dishonesty—troubles we aren’t certain won’t recur.
But if you want to trust the company that has faced numerous lawsuits regarding market manipulation, dishonesty with investors, and falsifying bank records, go for it.
*To date, Tether has never submitted to an independent audit.
Where Can You Buy Tether Gold?
Tether Gold is quite popular, and as such can be purchased on many major CEFI platforms, as well as on certain DEFI platforms. Below is a list of some of the places the token can be purchased.
· Kraken
· MoonPay
· Binance
· OKX
· Zengo
As always, there may be additional places to purchase Tether Gold that are not listed here.
Overall, while the idea behind Tether Gold is excellent, we urge all investors to proceed with caution. Ensure, before you buy, that you trust Tether Gold, and even if you do, don’t invest any money you don’t intend to lose.
