Overview of stable crypto coins – GoldMint
Tether is a Bitfinex subsidiary, which issues USDT tokens. Currently this is the most demanded stable coin on the market. Everyone who deals in crypto currencies has heard about it at least once. There is a bunch of articles in the Internet to cover the topic.
This token operates on Omni Layer Blockchain which branches from Bitcoin blockchain.
Actually, Tether covers their transparency here https://wallet.tether.to/transparency. But how do we know whether this data is credible? There are no any confirmations or audit statements. Furthermore, at some point company’s shareholder equity was negative. Check this out http://archive.is/yaolX.
It means that USDT tokens might be issued but not backed by anything.
As we see, Tether is transparent, but this transparency has no effect on the real world.
Therefore, if mass redemption of USDT into USD occurs, it will likely put an end to Tether.
Tether’s fees look good.
Transactions between USDT wallets are absolutely free of charge. Transfer to bank account costs 0.1%, or 20 USD.
It is up to you if you choose to convert your money or crypto tokens into USDT. However, I would not recommend it. If you possess 5000 USDT, that actually translates into 0 USD — and you must realize it.
Actually, Tether does not conceal their fraud and openly publishes the following statement in its “legal” section:
“Once you have Tethers, you can trade them, keep them, or use them to pay persons that will accept your Tethers. However, Tethers are not money and are not monetary instruments. They are also not stored value or currency.
There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers.”
Generally, DigixDAO is the first company that comes to mind when you think about gold backed stable coins. The company was established in Singapore in 2016, and it is one of the first Ethereum based business projects. DigixDAO operates on Ethereum blockchain and issues 2 tokens — DGX and DGD. DGX tokens equal 1 gram of gold each, and are 100% backed by real gold. DGD tokens provide the holders with voting power proportionate to their token amount. DigixDAO often posts updates on Medium. However, they still haven’t launched DGX tokens. At the moment DigixDAO issued only DGD tokens with speculative value only.
DigixDAO has a complicated procedure for issuing and auditing their DGX tokens. However, as the company is still at development stage, there is no way to verify how this system works. To quote the Digix website: “An established auditor, Inspectorate Bureau Veritas, provides quarterly audits of every single Gold asset in our Safe House vaults. Established since 1828, they are a world leader in Testing, Inspection and Certification Services”. This sounds good, but there is one bottleneck in this scheme. The company stores all gold bars in just one vault. What would happen if it suddenly closed? They do not have an answer to this question and I’m afraid they don’t want to bother themselves with it.
- DigixDAO charges 0.13% of transacted amount.
- Total demurrage fee is 0.6%. 0.2% goes to DigixDAO and 0.4% goes to the storage.
This is actually not a stable coin. The company just promises that reward for every mined block would be calculated according to the following formula (Price of Gold at time of mining x 1 OroCoin / 100). This value will reduce twofold every 800,000 blocks. Past 800,000 blocks, the value of a block will be equal to (Price of Gold at time of mining x 1 OroCoin / 200), and so on.For instance, if the price of gold is currently $1,143 USD, then the block reward would be 11.43 OroCoins.
You won’t find any white papers on OroCoin site. This is really weird, as today every decent project is backed with white papers, i.e. official documents describing how the project actually works. However, you will find nothing like this on the site. That is my first concern. The second one is that there is no any team member mentioned on the team’s page. Instead, they posted a job offer and said there would be some charge to join their team.
I did not find any information regarding OroCoin’s gold security. I didn’t find any white paper or any kind of official documents either. Lastly, I didn’t find any information regarding team members.
This company was established by Aleksandr Sokolov from Slovenia. Actually, this company has nothing to do with stable coins. It looks as if it’s a financial pyramid. First, you have to invest between 100$ and 20k$ for a 0.3% to 0.5% daily ROI for 365 days. This is how you acquire one of the following status:
- Starter — $100
- Partner — $500
- Business — $1000
- Master — $5000
- VIP — $9000
- Diamond — $20,000
GoldBlocks pays this ROI in a publicly tradeable cryptocurrency, also called GoldBlocks.
After that, you can invite affiliates. Referral fees are also paid from the funds invested by affiliates.
There are 3 grades of fees paid through a one-level reimbursement structure:
- Level 1 (personally sponsored affiliates) — 10%
- Level 2–3%
- Level 3–2%
Aside from a daily ROI in coins, affiliate packages also include upfront receivables:
- Starter — 100 GB Coins
- Partner — 500 GB Coins
- Business — 1000 GB Coins
- Master — 5000 GB Coins
- VIP — 9000 GB Coins
- Diamond — 30,000 GB Coins
How is this all actually tied to gold? Well, affiliate packages also include a specific amount of gold:
- Partner — 1 gram
- Business — 2 grams
- Master — 5 grams
- VIP — 20 grams
- Diamond — 25 grams
That the only thing which GoldBlocks and gold share. There are some additional rules and conditions within this project but they don’t really bear any significance.
There is a list of operations posted in their blockchain browser. However, there is no any information on how the coin is secured.
So, what do we have here? Obviously, there is no any real product or service. I did not find anything like a white paper on the site, and there is certainly no public information regarding the team. They do not have a Slack channel or Github account as well. On their forum branch you can find a lot of negative feedback regarding the ways their wallet operates. Moreover, it seems like GoldBlocks’ dev team is on vacation and the project is currently bot active. There is nothing more to say here.
Xaurum is one of the first gold-backed cryptocurrencies.
Initially, 1 XAUR equaled 1g of pure gold. However, today 1 XAUR costs 0.2$ and 1g of gold costs about 40$. Obviously, something went wrong.
Actually, XAUR is not a stable coin.
Here is a short summary from the site:
“Xaurum is unit of value on the golden blockchain, it represents an increasing amount of gold and can be exchanged for it by melting. Xaurum Golden Blockchain is a transparent ledger of accounts that accounts for the distribution of gold owned by the Xaurum CommonWealth, to provide an increasing base to Xaurum value. The CommonWealth is maintained by Auresco Institute physically and Ethereum network digitally.
Xaurum can be mined cooperatively and profitably on the Goldmine. Xaurum exercies cooperative control over the money supply, through decentralized cooperative mining and minting. Xaurum is coined by exchanging the mined value for physical gold, stored as the CommonWealth gold reserves. It was first coined on a PoS Blackcoin blockchain, and has transitioned to Ethereum.”
Xaurum entered its second development phase on July 18, 2016. The offer of Xaurum coins increased dramatically. The old Xaurum coin (XAU) was split into 8000 parts to form the new Xaurum coin (XAUR). In addition, the system migrated to Ethereum Smart Contracts from the Proof of Stake protocol. Starting from this point, XAUR dropped in price by more than 99,8%, i.e. from more than 1000$ to 0,02$.
Xaurum has just one vault — Xaurum commonwealth, located in Slovenia.
Xaurum does not let you buy-back XAUR coins for fiat money, but you can “melt” your coins to obtain physical gold.
On Xaurum website you can find a confirmation that Xaurum actually owns some amount of gold http://xaurum.org/images/document.jpg. Their audit company HQ is in Turkey. However, there is one odd thing — there is no issue date on the document. There are some signatures, but the document itself is not dated.
Xaurum sometimes leaves messages in their forum branch like https://bitcointalk.org/index.php?topic=1546279.msg18881309#msg18881309. That’s quite peculiar, as so far not a single gold-based cryptocurrency company ever took a picture of their gold bars and posted it in public.
“Min transaction Ethereum fee for sending Xaurum: 0.00061213 ETH”.
To “melt” your XAUR coins and get gold bars “some additional costs will be required as Xaurum transaction fees (0.5 XAUR per transaction) and as costs for securing international transport, that depend on quantity and your location ( you can preview the options and costs here)”.
Essentially, the project is not dead, as Xaurum regularly posts updates. It is one of the earliest gold-tied blockchain projects with the most complete legal page. They posted one curious document, according to which all the purchased gold is owned by individual purchasers and not by the Xaurum CEO. But is this document legally binding?
One other point worth mentioning is their Github page. As we can see, the page is not active. The latest update was on 8 Aug 2016 and their repositories are almost void of data. What does it mean? Is the project even real? Quite suspicious, isn’t it?
Xaurum has only one centralized vault. It means that if something happens, the project will collapse and your XAUR tokens will lose all value.
Xaurum provides an opportunity to exchange physical gold for XAUR. But 1 XAUR equals 1g of gold and the price of 1 XAUR is about 0.2$, when at the same time 1g of real gold costs about 40$? I ran an experiment: I sent a request to reclaim 20g of gold. Then I received the following e-mail:
Today, the cost of 1 XAUR is 0.193581$. Therefore, they want me to pay them 3807.5$ for 20g of gold. As for today, 1g of gold is worth 42.34$ and 20g = 846.8$. So I have to pay almost 3000$ for delivery of 20g of gold? Not bad, guys!
Onegram is an interesting currency because it’s based on Sharia and Islamic laws. It’s a gold-tied cryptocurrency that charges a 1% transaction fee, part of which is spent to buy additional physical gold. They are trying to create their own payment gateway called YalaPay, and also want to issue a custom Mastercard that draws from a user’s Onegram coin wallet. Each Onegram coin will be backed by at least 1g of 999 standard gold. This company might find a very good market niche for itself.
However, in real world, OGC coin is will not be stable. In their White Papers the following formula is used: OGC Value = GV + TF + DP, where:
GV — Gold Value (GV), with the value determined by the spot price of gold;
TF — The current value of the transaction fees reinvested to buy more gold (TF), with the value determined by the usage of OGC;
DP — Demand Premium (DP), with the value determined by market demand;
So, as you can see, OGC coin is just tied to gold, but it is not stable.
The company is completely non-transparent. There is no information on the website regarding transparency. There are no updates on whether it will be available.
OneGram just mentions that all gold bullions will be stored in GoldGuard’s storage. Gold Guard is the company has been dealing with gold in Dubai free zone for ten years.
Each OneGram transaction charges 1% transaction fee, up to a maximum of 1 OGC.
OGC can be exchanged to physical gold, but there is no information regarding the fees on this exchange.
The project definitely looks very suspicious. There is not much information regarding their technical implementation. In WP, you can find just one paragraph mentioning their own blockchain with PoS algorithm with over 3 months of development. What do they mean by “over 3 months”? Does it mean it is going to be a very serious development? Also, they say “the cumulative 2.5% transaction fees distributed in a block reward to the trusted nodes will maintain a secure blockchain”. Who is going to mine for just 2.5% of 1% transaction fee?
The white papers look very weak. They contain just 9 pages and almost half of them is dedicated to Islam and Sharia rules. Moreover, just 4 pages are dedicated to project itself. To me is looks like a fraud.
OzGold is a US company operating on Ethereum blockchain. OzGold has 100 000 Oz of gold. The physical gold is stored in Australian Gold Storage facility and charges no storage fees. Therefore, here we have a completely centralized vault.
When I discovered OzGold’s site, I found out there are no links to their white papers and there are no links to the team. That’s pretty odd. Then I tried to find OzGold’s White Papers on the internet via Google. And I did found them on another site. Pretty odd, huh? There are no WPs on official website, but I found them on another one. And this website is also dedicated to crypto tokens backed by gold. However, the name is different — CryptoGLD tokens. CryptoGLD is also registered in the US. On their main page there is no information regarding their white papers or team either. CryptoGLD has much less information regarding the way they operate. And CryptoGLD also runs on Ethereum blockchain. If you check the link page, you can see there is a lot of links forwarding to Australia. OzGold is also connected with Australia strongly.
Here is one more peculiar thing. OzCoin website says “the total number of coins is limited to the 100,00oz of gold. No more or less than 10 million coins will ever be minted for the 100,000 ounces of gold”. So, we have 10 000 000 OzCoins. But here is the extract from CrypoGld “10,000,000 coins are fully backed by 100,000 ounces of gold”.
I think there are too many coincidences and this is the same project under two different names. But why did they do this? And what is the prevailing coin? This looks very suspicious, doesn’t it? This is definitely a big red flag. From now on, I will consider them the same project.
In fact, OzСoin (or CryptoGld) is not a stable coin because “OzGLD is not simply a digital representation of gold, and it is congruent with the price of gold in one sense but it is not FIXED to the price of gold.” As OneGram coin or XAUR the OzGLD’s price is just connected with gold’s price by some formula.
There is no any public page with data on transparency on both sites.
“Transaction fees are lower that any alternative way of purchasing gold and zero fees payable on initial purchase from www.ozgld.com.
Although the physical gold is stored in Gold Storage facility, no storage fees, administration or holding costs apply.
Your ownership of the OzGld is 100% anonymous and freely transferable over any borders”.
It is really odd why one company created two identical crypto tokens under different names. Maybe there are some differences, but I didn’t find any. There are no links to GitHub, Slack etc. There are no team page and public white papers as well on both sites. This project is certainly a dark horse.
The last but not the least: “Although the Cryptocurrency is 100% backed by gold, it is not redeemable for physical gold for a period of 5 years from 1st March 2017, namely after 1st March 2022. [NOTE: No storage fees will be accrued nor will storage fees be charged to OZcoinGold coin owners]”. This is a good promise. But how can we trust a company with so many issues I mentioned above? Sorry guys, I just can’t believe you.
“Royal Mint Gold (RMG) is the name given to a new gold investment product that will be provided by The Royal Mint. This product is real gold, stored in The Royal Mint vault, traded on a digital trading platform provided by CME Group. RMG will not be sold by The Royal Mint to consumers directly, but instead will be available to investors through third party investment intermediaries such as banks and brokers.”
“Counterparty risk is negated through direct ownership of physical gold where 1 RMG represents ownership and full title to 1g of physical gold bullion. RMG is held in the form of fully allocated, LBMA Good Delivery Bars within The Royal Mint vault, a highly secure, on-site bullion storage facility.”
“To make RMG possible, The Royal Mint, the world’s leading export mint, has partnered with Chicago Mercantile Exchange (CME Group), the largest, most diverse derivatives marketplace in the world. CME Group has developed the trading platform that RMG will be traded on, and has been working with partners Alphapoint and Bitgo to develop the technology and blockchain ledger. The trading platform and blockchain technology allows gold to be traded in a real-time, cost-effective and secure way.”
Actually, there is no information regarding transparency of RMG. However, there is one interesting statement on their FAQ page:
“The physical gold is held in The Royal Mint vault, a highly secure, on-site bullion storage facility. RMG in issuance will be reconciled on a daily basis by The Royal Mint. It will be physically inspected and certified by independent auditors at least once every six months. KPMG are our appointed internal auditors and via a risk based approach perform internal audit procedures over the activities of the organization. PwC are our appointed external auditors. RMG can be redeemed for physical gold bars and coins produced by The Royal Mint, with physical delivery.”
It seems there is no transparency for general public. However, we are supposed to trust this statement. Considering RMG’s reputation, maybe it is worth it.
There are no storage fees. I didn’t find any information regarding transaction fees either.
RMG offers centralized storage in the Royal Mint facilities in the U.K., and currently they are only targeting institutional investors. They do allow physical redemption of gold and buyback in fiat. The goal is to launch the product backed by up to $US1 billion in gold bullions.
“The physical gold that the RMG in issue represent is held on an allocated basis in a secure vault and is owned by the RMG holders. The Royal Mint acts solely as custodian of the gold, which is delivered to a RMG holder at his/her request. The Royal Mint has no claim on the gold.”
RMG operates on Prova (Italian for “Proof”) blockchain platform, which is an open source solution available on GitHub. Prova is designed by BitGo. Now it is being tested by a select group of “major financial institutions,” and is scheduled for launch this year.
GoldMint is a new company that aims to introduce a real stable coin to the turbulent world of cryptocurrencies. GoldMint is a subsidiary of “LOT-ZOLOTO” — a gold trading company based in Russia with a turnover of 100$ mln in 2017.
Actually, two different tokens are going to be issued. The primary one is GOLD cryptoasset. They call it a “cryptoasset” to make it clear that GOLD is not just another token, but rather a token which is 100% secured by physical gold and ETF. “The assets are purchased and sold according to issued GOLD coins. At the same time, the company’s assets, evaluated in 999 gold standard ounces, are always equal or exceed the number of GOLD tokens issued”.
The second token is MNT. As GoldMint runs their own blockchain based on Graphene platform with PoS consensus algorithm, MNT tokens are going to be used by miners as a stake to create a block and put it in the chain. Miners will receive 75% of transaction fee included in the confirmed block. It means MNT tokens are definitely not secured, because MNT holders are not going to receive passive income.
Initially, GoldMint sold MNTP tokens issued on Ethereum platform during ICO. As soon as GoldMint blockchain is ready to go, all MNTP holders will be able to exchange their tokens for MNT.
The second important thing here is Custody Bot. This is a vending machine that is “intended to receive, assess, store and deliver physical gold”. It looks quite interesting. GoldMint says this machine is going to revolutionize the pawnbrokers market. Initially, it will operate under jewelry expert supervision and help employees in their work. However, in the future Custody Bot is to become fully automated and will eventually replace current pawnbrokers. Custody Bot will be connected to blockchain, so all the data regarding jewelry inside it will be secure for ages and completely transparent. Nobody else does something similar. Future is coming!
GoldMint will save all the information regarding physical gold and ETF in blockchain. Everyone will be able to check how much gold GoldMint has and how many GOLD cryptoassets the company issued.
There will be no storage fee. Transaction fee is specified in White Papers and equals 0.3%.
The project looks exciting. GoldMint announced there would be decentralized storage of physical gold. This will be achieved by agreements with major banks and pawnbrokers all over the world.
White Papers are very detailed and explain all the architecture. GoldMint project has been structured quite safely from legal perspective. However, this opinion is preliminary since it is based exclusively on the white papers: no token sale terms have so far been posted on the website.
BitShares created a whole series of stable coins named SmartCoins. To review them, let’s take BitUSD as an example.
BitShares guarantees that BitUSD is always worth at least 1$, as there is a feature in blockchain that guarantees the purchase of BitUSD at the price of 1$ in 24 hours.
In fact, when you buy BitUSD, you open a long position on BitUSD. “You can think of it like this: You go to the ‘bank’ (the bank being a smart contract on the BitShares blockchain), and ask for 100 BitUSD. In order for you to get them from the bank, you need to lock away collateral worth at least 2x of what you want to ‘borrow’ from the bank. So you lock up $200 worth of BTS in a smart contract and the blockchain will issue new BitUSD for you and send it to you. These BitUSD are your ‘debt’ against the bank. You can only get back your collateral if you pay back the debt (the 100 BitUSD).
That way, each BitUSD is backed by at least $2 worth of BTS locked away in a smart contract”.
“If the value of the collateral falls below a certain threshold (175%), your position will be “margin called” i.e. liquidated by the smart contract by means of buying back the debt directly from the internal exchange — everything left from collateral will be sent back to your account”.
Since all operations are processed by blockchain and no human factor is involved, transparency is absolute. There are no doubts here.
BitShares platform’s trade fee is low and constitutes 0.01213 BTS. BTS today is $0.145378, i.e. trade fee is about $0.001$. That is a very good price!
However, there is a big spread between “ask” and “bid” prices.
If you buy at ask price, you’ll pay more than $1.06 for each BitUSD. Besides, you have to consider fees when buying BTS (or some other cryptocurrency) for fiat currencies, since you don’t have an opportunity to buy BitUSD directly. In such case, the fee will be much more 6%, which is very expensive.
BitUSD looks like a stable coin. Let’s see the ratio chart BitUSD/USD for the last 3 months:
We can observe approximately 5% fluctuation. That is not good.
The second bad thing is that you have to deposit 200% as your collateral in order to buy BitUSD. If BTS price goes up, you will be able to withdraw a part of your collateral. On the other hand, if price goes down, smart contract on blockchain can liquidate your position on BitUSD if you fail to add required amount of BTS to your collateral. Still, it can happen if price goes down by 175%.
Let’s take a look at BTS/USD ration chart to make an approximate assessment of this scenario.
Here we clearly see that during last 3 months the price of BTS dropped from 0.6$ to less than 0.2$. It means you would get a margin call on your BitUSD by smart contract if you don’t add some BTS to your collateral. That is a real downside. That is definitely not what you expect to see after you got back from vacation and get in touch again with a world of cryptocurrencies.