Europe’s trusted companies to create gold token secured by Bitcoin

CoinShares, Blockchain, and MKS (Switzerland) SA form consortium behind DGLD, a network for digital gold secured by the Bitcoin blockchain

Europe’s trusted companies to create gold token secured by Bitcoin. Source: shutterstock.com

A consortium comprising CoinShares, Europe’s largest digital asset manager, Blockchain, the leading provider of cryptocurrency products including the world’s most popular crypto wallet, and MKS (Switzerland) SA, part of the world’s most trusted gold group, announced that after two years in development, it has launched the DGLD network with more than $20 million in gold digitized.

DGLD is a digital asset (token) representing allocated physical gold stored in a Swiss vault and tokenized with a side-chain built on the Bitcoin network. Best understood as a digital proof of ownership of allocated gold, DGLD leverages the power and immutability of the Bitcoin blockchain to provide convenient purchasing of gold with the independence of physical gold ownership, and the 24/7 nature of digital assets.

Each DGLD token is the digital equivalent of 1/10th of a troy ounce of gold, vaulted in Switzerland. Before a new token is created, LBMA1 gold is allocated and placed in a Swiss vault. Then, DGLD representing that specific gold is created and sent to a DGLD wallet. This approach unleashes physical gold and renders it both digitally usable and physically redeemable.

Gold has long been trusted as a hedge to geo-centric economic and political crisis, and inflationary monetary policy but gold ownership has always come with trade-offs. Traditionally, purchasers either buy a synthetic product such as an ETF for convenience, which comes with multiple layers of intermediaries, or buy and vault physical gold. DGLD represents a new format that provides convenience and security; without the middlemen.

DGLD is not intertwined in this same legacy structure; nor, under Swiss law, is it subject to the same regulatory constraints as synthetic gold investments (e.g. exchange-traded products like ETFs). It falls under category 5 of FINMA’s stablecoin taxonomy – ‘linked to commodities with ownership rights.’ In other words, if you hold a DGLD token, you hold title to the gold – no web of intermediaries and not subject to any prudential licensing requirements under Swiss law.

SEE ALSO: Blockchain and precious metals

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