There are a few projects which are looking to back up cryptocurrency assets with precious metal standards. The idea is that this will help more traditional investors enter the cryptocurrency sphere, since sometimes the idea of a currency only backed by faith in math can put them off. There are also other advantages to having an asset backed by precious metal. To that end, GoldMint is a blockchain-based platform operating on a cryptoasset backed by gold.
As Good as Gold
GoldMint runs its platform on a decentralized blockchain and has a GOLD cryptocurrency asset. This cryptoasset is backed by pure (.999) physical gold or gold ETFs (exchange traded funds) as its security. At any time, GoldMint’s gold reserves equal or exceed the mined amounts of the cryptoasset GOLD.
The project chose gold as its security because of the historical and current popularity of gold by investors as a way to mitigate risk and diversify their portfolios. Precious metals like gold are often seen as havens for wealth because they generally perform in a predictable manner. 1 GOLD is equal to 1 ounce of gold on the London Bullion Market. This means that the owner of the GOLD asset — the token on the blockchain — essentially owns its weight in physical gold. GoldMint says that GOLD holders can loan out or receive loans with GOLD as their collateral. The company feels that they have found a way to combine the stability of gold, the convenience of fiat, and the security of the blockchain in its cryptoasset.
The Custody Bot
But how does GoldMint acquire all this gold in the first place? And how does it keep all that gold safe? They purchase their gold from the various gold markets around the world, and then translate that wealth onto the blockchain via GOLD.
Storage and verification is a completely different story. If fake gold were to enter the blockchain, it would disrupt the entire GOLD ecosystem. To combat this, GoldMint thought up something it calls The Custody Bot. This is a bot that accepts, stores, and tests gold put into it for purity. The testing was needed because of the gold from non-credit financial institutions who might sell gold to GoldMint. Gold sold by individuals, pawnshops, and small banks needs to be tested for purity to ensure that the correct amount of pure gold enters the GOLD ecosystem and the correct amount of GOLD gets distributed.
MNT and GoldMint’s ICO
While GOLD is GoldMint’s cryptoasset, its platform’s token is MNT. The blockchain itself is based on a Proof of Stake, Graphene model. That means that the more MNT an individual owns, the more likely he or she is to find and process a block on GoldMint’s blockchain. In doing this, the miner receives 75% of the reward and fees from the block in the form of GOLD, while the other 25% of that GOLD funds GoldMint’s maintenance and charities.
MNT is being sold in the GoldMint ICO. The ICO will take place in October, and its exact dates will be announced soon. This token will be exchangeable to GOLD, but also plays an important role in mining and increasing a miner’s chances of being called to process a block and reap the reward. 80% of the capped 10,000,000 MNT will be released during the ICO.
This is not trading or investing advice; always conduct your own independent research.