Over the past few months, stablecoins have commandeered many headlines with their fiat currency backing. As of recently, Iran has brought a new project into the spotlight: a gold-backed crypto asset.
According to a report from the Financial Tribune, Kuknos Company showed off its new blockchain-based, gold-backed asset to notable bank and regulatory players at a recent event. The asset, named PayMon, stems from the Persian word “covenant,” the report explained.
Kuknos Company, along with four large banking players, reportedly cooperated to develop the asset. The four banks, Bank Mellat, Bank Pasargad, Bank Melli Iran and Parsian Bank will also utilize the gold-backed asset. As mentioned in the article, the cryptocurrency will also see listing on Iran Fara Bourse, an over-the-counter (OTC) exchange based in Tehran, Iran.
According to a guide from CoinTelligence last year, 38 different gold-backed crypto asset options exist. Some of these assets include GoldCrypto (AUX), GoldMineCoin (GMC), Goldmint (MNTP), The Midas Touch Gold (TMTG), USDVault (USDV), and OneGram Coin (OGC).
The idea behind backed or pegged coins is to stabilize the coin’s value to that of another asset. Stablecoins peg their value to different fiat currencies, such as the U.S. dollar. Similarly, gold-backed coins or tokens aim for a value pegged to gold. Although many of the gold-backed crypto assets go about the process in different ways.
ZenGold (ZGC), for example, reportedly is fixed to the price of one gram of gold, “which is securely stored in the Shanghai Gold Exchange Vault,” CoinTelligence noted in its report.
Utilizing a different concept, USDVault token is a U.S. dollar-pegged stablecoin, “backed by and redeemable for LBMA gold bullion stored in Swiss vaults,” as noted in a BusinessWire press release in July of 2018.
As mentioned on the Federal Reserve Bank of Richmond’s website, 1973 saw the last remnants of the U.S. gold standard fall. Although, the site also stated most of the major movements away from the gold standard started as far back as 1933.
Cryptocurrency users and aficionados obviously see an opportunity in a gold-backed currency or asset.
Bitcoin as digital gold
Bitcoin itself has also seen its fair share of comparisons to the valuable metal. CNBC’s coverage from June 2018 revealed Apple’s co-founder Steve Wozniak’s reference to bitcoin as digital gold. (Although Wozniak’s comment is directed toward bitcoin in comparison to the altcoin market.)
“Only bitcoin is pure digital gold… and I totally buy into that. All the others tend to give up some of the aspects of bitcoin. For example, being totally decentralized and having no central control. That’s the first one they have to give up to try to have a business model.”