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Tether Gold
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About Tether Gold
Tether Gold (XAUT) is a stablecoin cryptocurrency whose value is pegged to physical gold. It was launched in January 2020 by Tether, the company behind the popular stablecoin USDT. XAUT aims to digitize gold and make it easier to trade and use like other cryptocurrencies. Each XAUT token represents ownership of one troy ounce of gold stored in a vault.
How Tether Gold Works
Tether Gold utilizes a proof of reserve system to maintain its 1:1 peg with gold. For every XAUT token issued, Tether purchases an equivalent amount of physical gold and stores it in secure vaults through a custodian. The gold reserves are regularly audited by independent third party firms to ensure full backing.
When you buy XAUT, you are purchasing tokenized gold that can be easily stored or transferred. The process is similar to buying and using other cryptocurrencies. XAUT balances and transactions are recorded on the Ethereum blockchain which provides transparency into reserves.
Benefits of Tether Gold
Tether Gold provides a convenient way to gain exposure to physical gold within the cryptocurrency ecosystem. Here are some of the key benefits XAUT offers:
- Direct ownership of physical gold without handling or storage headaches
- Liquidity of a cryptocurrency – can be traded 24/7 on crypto exchanges
- Transparent proof of reserves system
- Redeemable for delivery of gold if desired
- Potential to earn yield through lending or staking
- No capital gains tax (in some jurisdictions) when used as currency
For investors, Tether Gold offers an easy way to diversify into gold without directly investing in the commodity. It hedges against volatility and inflation like physical gold. The cryptocurrency format improves divisibility and transferability.
How to Buy and Store Tether Gold
Tether Gold can be purchased on most major cryptocurrency exchanges where Tether is listed. This includes platforms like Kraken, Bitfinex, and Binance. Fiat currencies can be directly exchanged for XAUT.
XAUT can be stored in any ERC-20 compatible cryptocurrency wallet. This includes both hot wallets like Metamask and cold storage hardware wallets. The tokens remain on the Ethereum blockchain. For added security, storing with a hardware wallet is recommended.
When redeeming XAUT for physical gold delivery, you can work directly through Tether or an authorized partner. The minimum redemption amount is currently 430 XAUT, equal to one London Good Delivery gold bar.
Staking Tether Gold
Like some other cryptocurrencies, Tether Gold offers opportunities to earn yields through staking and lending programs. On supported platforms like Midas Investments, XAUT holders can stake their tokens to earn around 5-8% APY interest paid in Tether’s USDT stablecoin.
By allowing your XAUT to be lent out in decentralized finance markets, you can earn attractive yields on the gold backing your tokens. However, staking does come with risks of smart contract vulnerabilities. Perform due diligence before committing tokens.
Comparison to Other Gold-Backed Cryptocurrencies
Tether Gold is one of several cryptocurrencies pegged to physical gold reserves. Others include PAX Gold (PAXG) and DigixGold (DGX). Here is how XAUT compares:
- PAXG is backed by gold held by Paxos rather than Tether. It can be redeemed for larger minimums.
- DGX is issued on Ethereum by Digix and has a similar proof of reserve system.
- XAUT has the widest availability on exchanges and most liquid trading volumes by far.
- Tether is a more established stablecoin issuer than Paxos or Digix.
- XAUT, PAXG, and DGX are all credible gold-backed crypto options.
Future Outlook for Tether Gold
Tether Gold aims to bring gold into the decentralized finance space and make it easy to use as a currency. Looking ahead, XAUT may see growing adoption if digital asset usage continues expanding. It provides a convenient bridge between precious metals and cryptocurrencies.
However, XAUT’s growth depends heavily on Tether’s reputation and the success of USDT. Controversies around Tether could negatively impact XAUT. But increased cryptocurrency integration into mainstream finance would likely benefit the token. In the years ahead, expect XAUT to continue providing tokenized gold exposure.
Conclusion
In summary, Tether Gold presents digital gold ownership with the usability of a cryptocurrency. Its reserves are verifiable on the blockchain, redeemable for physical gold, and easy to trade 24/7. While not without risks, XAUT offers a compelling way to gain exposure to gold within a digital asset portfolio. As cryptocurrencies evolve, expect tokenized commodities like XAUT to likely play an important role linking traditional and decentralized finance.
