To fully understand the purpose of gold, we need to look at how the gold market began. Throughout history, gold has been a valuable store of wealth for humanity. While its history began in 2000 B.C., when ancient Egyptians used the material to form jewelry, it was not until 560 B.C. that gold emerged as a currency. This use-case became widespread when merchants worldwide decided to create a more standardized and easily transferable form of money that would simplify trade. Since gold jewelry was already widely accepted throughout different parts of the world, it seemed like a natural progression for gold coins to also become widely accepted and recognized.
With relics from the Greek and Roman empires prominently displayed in museums worldwide, and Great Britain developing its own metals-based currency in 775, the importance of gold grew throughout Europe and the United Kingdom. The British pound, shillings, and pence were all valued based on the amount of gold (or silver) they represented. Gold eventually became a symbol of wealth in Europe, Asia, Africa, and the Americas. In 1792, the United States government continued the gold tradition by establishing a bimetallic standard, which meant that every monetary unit in the United States had to be backed by either gold or silver. One U.S. dollar, for example, was the equivalent of 24.75 grains of gold. In other words, the coins used as currency represented the gold (or silver) that was currently deposited at the bank.
Some argue that gold has no intrinsic value and that it is an ancient relic with no monetary value. In today’s economy, they say that paper currency is the preferred form of payment and that the only value gold offers is as a material for jewelry. On the other hand, some argue that gold is an asset with various intrinsic qualities that make it unique and necessary for investors to hold in their portfolios. These people believe that there are as many reasons to invest in gold as there are vehicles to do so. Even though gold currently no longer backs the U.S. dollar or any other worldwide currencies, it still carries importance in today’s society. One of the main reasons for the reputation gold has earned in the modern economy is based on the fact that it has managed to preserve wealth throughout thousands of generations.
In an economic environment where investors are confronted with a declining U.S. dollar and rising inflation, the use of gold preserves wealth is even more prevalent. Gold has traditionally served as a hedge against both of these scenarios. Gold usually appreciates as inflation rises. When investors realize their money is losing value, they normally place their bets in a hard asset that has historically held its value.
Several factors contribute to Bitcoin’s value, including its applications as a payment system, its limited supply, and, most importantly, its decentralization, without which the other qualities would lose their appeal. Nobody can get their hands on it to control it; there is no central server that a hostile power could monopolize. Instead, the transaction database (the blockchain) is distributed across the network in thousands of copies. This is also the case with gold, which served as a model for crypto-currency and was inspired by its characteristics (means of payment, a quantity that increases little from year to year as it is rare). While gold is considered a centralized asset due to its link to currencies and banks, it has now been linked to the relatively new cryptocurrency industry.
Fearful of the massive debt and currency debasement in recent years, millions of investors have flocked to crypto and gold as places to store their wealth. A fundamental distrust of human power and claims to authority, backed by historical lessons, is at the core of this shift. History presents a series of cycles of the same stories told under different names and in other places. Both see their preferred asset, whether it’s cryptocurrency or gold, as a way to safeguard their wealth and purchasing power. It’s easy to understand why. With a 2% inflation rate, it takes less than 25 years for a currency to lose 50% of its purchasing power. As a result, the rise of cryptocurrency and the continued popularity of gold are understandable and logical. In fact, the conflict between the two parties was illogical.
Gold and cryptocurrency exist outside of the traditional financial and, more importantly, political systems. Both have decentralized pricing, are finite (at least most cryptos are), and can be used as a store of value and a future medium of exchange (as crypto volatility declines and as both crypto and electronic, physical gold become more common). As a result, the conversation is rapidly shifting. Rather than pitting themselves against each other, perceptive investors are taking a more nuanced approach. The debate is no longer about gold vs. cryptocurrency. Both contribute to hedging the risk of inflation, with a long history of certainty.
Even though some would not like to admit it, traditional banking is slowly declining, and the future of banking looks like it will be almost exclusively app-only. For this reason, fintech companies that plan to compete in this space need to offer a high-quality product across every part of their businesses. Along with that, for them to successfully achieve their long-term customer acquisition and retention strategies, they must offer access to both gold and cryptocurrency.
Investing in gold was once thought to be for the very wealthy, especially before the financial crisis of 2008. For the most part, gold meant jewellery to the average person. Owning physical gold was complicated by the need for storage, insurance, and a lack of transparency in pricing. Furthermore, few people realized the significance of owning gold. After 2008, central banks started abandoning all restraint, independence, and prudence. They did everything possible to build themselves up once again, from asset-purchase programs, balance-sheet expansion, and money printing to a plethora of monetary shenanigans. Through this, however, the result ended up being massive asset price inflation.
Slowly but steadily, the world outside of finance is witnessing inflation in goods, wage stagnation, and little-to-no interest on bank balances. It’s not good enough to rely solely on fiat currency as a source of wealth. Now, millennials and the younger generations who follow them are aware of the system’s current challenges. As a result, they have become crypto experts and recognize that the arguments in favor of crypto are the same arguments in favor of physical gold. The mindset of a cryptocurrency buyer is similar to that of a gold buyer. This is why structured notes, exchange-traded funds, unallocated gold, gold cryptos, and other instruments are being used by many institutions to provide gold exposure.
In a commitment to give people access to crypto tokens and gold, GoldPesa has created a digital token that transforms gold into an income-generating asset class. The team at GoldPesa is dedicated to providing access to a cryptocurrency that combines the simple ideology of intrinsic value with an asset that has passed the test of time and an intelligent quantitative trading strategy that was only previously available to the top 1%. To this end, GoldPesa’s objective is to create a gold-backed token that trades at a premium and has the chance to build wealth the way Bitcoin has.
Although GPX is backed by gold, it is not a stable coin. GPX has the characteristics of a tokenized gold-backed structured product because it combines physical gold, quantitative science, and blockchain technology. Each GPX token is backed by one gram of pure gold held in a secure vault. Its tokenomics, on the other hand, are truly unique. When buying a newly minted GPX token from GoldPesa, the price is the spot gold price plus 1%. The PAWN, a proprietary intelligent trading strategy developed by GoldPesa, manages half of the 1% fee. The profits generated by the PAWN are used to purchase and burn the GPX token on the market. As a result, GoldPesa creates demand while simultaneously reducing supply, driving the price of GPX higher for token holders.
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