CoinShares, Blockchain Wallet, and MKS Introduce Gold-Backed Token

CoinShares, a leading digital assets management firm, has joined forces with Blockchain wallet and MKS, a Geneva-based precious metals trading firm, to develop DGLD, a gold-backed token powered by the Bitcoin distributed ledger technology (DLT) network. The team claims DGLD has all the qualities of physical gold with none of its limitations, according to a press release on October 15, 2019.

Real Gold on the Blockchain

In an effort to make it possible for both retail and institutional investors to invest in gold without having to go through the stress associated with the ownership of physical gold bars, CoinShares, Blockchain and MKS are launching the DGLD token.

Per sources close to the matter, DGLD token has been under development since 2017 and the project is built upon the Bitcoin blockchain, giving the token the entire attributes of real gold, gold exchange-traded funds (ETF) and the decentralized, borderless nature, robustness and security of the Bitcoin distributed ledger.

The team claims that the DLGD blockchain is linked to the Bitcoin network via CommerceBlock’s Mainstay protocol, ensuring that the record of gold ownership remains tamperproof.

$20M Worth of Physical Gold

The team says the DGLD network holds more than $20 million in digitized gold, with the physical gold stored in a Swiss vault.

What’s more, the team has revealed that each DGLD token is the digital equivalent of 1/10th of a troy of the London bullion market (LBMA) gold, and for every new DGLD token created there must be a corresponding LBMA gold allocated and stored in the vault.

This fosters transparency, while also ensuring that each DGLD token can be redeemed for its exact equivalent in physical gold and vice versa.

Interestingly, the team has hinted that unlike gold-backed ETFs and other synthetic gold investments, DGLD comes under category 5 of FINMA’s stablecoin taxonomy, which gives DGLD token holders direct ownership to the physical gold, without any form of intermediaries.

DGLD will initially be available to both retail and institutional investors via Blochain’s PIT crypto exchange before the end of the year.

Commenting on the development, Danny Masters, Chairman of CoinShares said that:

“DGLD combines the stability of the world’s most enduring asset, gold, with the security of the world’s most resilient network, Bitcoin. You can now have the peace of mind of Swiss vaulted physical gold, with the same convenience, but not the same layers of middlemen, as owning a gold ETF.”

In related news, in September 2019, Paxos announced the launch of PAX Gold (PAXG), a cryptocurrency backed 100 percent by real gold.