DigixDAO & Digix Gold: A Beginner’s Guide To Tokenized Gold

DigixDAO & Digix Gold

CoinMarketCap today lists more than 1500 cryptocurrencies and looks like it has no plans to stop anytime soon.

Most of you would probably be thinking that the more the merrier. But that is not the case. It actually gets very difficult to find one unicorn out of so many options. But people do manage to find out their unicorns and back them.

Wanna know the secret to do that?

I will tell you exactly how to do so through an example of fundamental analysis of today’s coin and give you insights on which questions and answers you should purse while researching.

The coin in discussion today is DigixDAO.

In this fundamental analysis, we will explore Digix using the following questions:

  • What Is DigixDAO?
  • What Is Digix Gold Token (DGX)?
  • What is DigixDAO Token (DGD)?
  • How Does It Work?
  • Digix Team
  • DigixDAO ICO
  • Total Supply Of DGD & DGX
  • Where To Buy DGD & DGX
  • DGD & DGX Tokens Wallets
  • Future Of Digix

What Is DigixDAO?

DigixDAO was formed to create and manage a new cryptocurrency that will be backed by actual physical gold stored in vaults.  (It’s called DGX tokens, which we will discuss further).

DigixDAO is a decentralized, autonomous organization proposed and created by Digix Global company.

Digix Global’s whitepaper states that they do this through a protocol that they have developed – PoA (Proof of Asset) or PoP (Proof of provenance) – and the first asset they will tokenize is gold.

The protocol and the DAO model can be extended to other precious metals and physical assets too, but for now, that is out of scope.

For this, Digix Global has created two types of Ethereum tokens i.e. DGD and DGX (more details on them later). But in nutshell:

The aim of DigixDAO is to grow the Digix Ecosystem through decentralized consensus among DigixDAO (DGD) token holders. Only DGD token holders are given the platform access in the Digix ecosystem to participate in making the active managerial decision to any proposals submitted to DigixDAO. As a reward for this work done via active participation on proposals, there will be a reward with DGX tokens for making such decisions with DGD tokens for the benefit of the entire Digix Ecosystem. (Source: FAQs)

This will ensure high liquidity for gold and also give investors the option of leveraging the relatively less volatility of gold while simultaneously enjoying the benefits of the cryptocurrency world.

What Is Digix Gold Token (DGX)?

Digix Gold Token (DGX) is the actual token that will be backed by physical gold in equivalence of 1 DGX equal to 1 gram of actual redeemable gold.

The actual gold will be stored securely in custodial vaults at the Singapore Safe House.

Moreover, DGX will be created only when someone wants to buy gold through the Digix gold marketplace. This way the investors will get DGX equivalent to the gold they bought through Digix in exchange, which they can redeem for equivalent gold at any point in time.

Digix Gold Token

In short, it is a gold-backed cryptocurrency completely managed by DigixDAO.

Please do not mistake DGD for DGX as both are totally different things.

Digix Gold token (DGX) has not yet been launched but it will be released very soon given the development and preparations are almost complete.

What is DigixDAO Token (DGD)?

Thinking what DGD stands for?

Well, I was also confused initially as to why we have two tokens, but after reading the whitepaper I couldn’t hold myself back from appreciating the concept.

DGD is the governance token of DigixDAO.

People who hold DGD tokens will have the voting rights and other managerial rights to decide the direction as to how the whole ecosystem of Digix should move forward.

What is DigixDAO Token

In return for their work and contribution, DGD holders will also be entitled to rewards in the form of DGX that will come from transaction fees and asset management fees charged from investors of gold. You can check the specific details of the rewards here.

How Does It Work?

Digix Global

Digix Global is the company that has proposed the model of DigixDAO and Digix Gold.

They have also developed a PoA (Proof of Asset) or PoP (Proof of provenance) protocol.

This protocol tracks assets from the supplier to the custodial vault in a transparent and secure manner. It does this with private keys and documentations uploaded onto IPFS and the blockchain, both decentralized, permanent, and immutable.

The protocol generates PoA asset cards based on many on-chain and off-chain processes as listed below:

  • ­Time Stamp of card creation
  • ­ SKU of the gold bar from Digix Marketplace (Unique ID number of product)
  • ­ Bar Serial number
  • ­ Chain of Custody digital signatures (Vendor, Custodian, Auditor)
  • ­ Purchase Receipt
  • ­ Audit Documentation
  • ­ Depository Receipt
  • ­ Storage fees due

Note: PoA Asset Cards are kept in an Ethereum Wallet.

All these processes are done to finally generate the Proof Of Asset card which is then fed to Digix Gold smart contract to generate DGX in exchange for it in the ratio of 1 gram:1 DGX.

For example:

If 100g PoA card is sent to smart contract then 100 DGX is generated for the user.

Similarly, the vice-versa is also true where one can give 100 DGX which will turn into 100g PoA card to be recast into 100g of actual gold in the vault. You can also receive the actual gold yourself depending on the country you live in.

How Does Digix Work

More information can be found in Digix’s whitepaper on their main site.

Digix Team

Since forming in Singapore in 2014, Digix Global has assembled an elite team of business, legal and technology experts to become one of the smartest teams in the blockchain space.

DigixDAO ICO

Digix came into existence in 2014 in Singapore, Later in 2016, they conducted their ICO in March 2016, which was sold in 12 hours.

They easily achieved their hard card of $ 5.5 million by selling 1.7 million DGD tokens, the governance token of DigixDAO model.

They have reserved 300,000 tokens for the Digix team and this makes the total supply of DGD as 2 million tokens.

Total Supply & Market Cap Of DGD & DGX

The total supply of DGD is 2 million tokens and the total supply of DGX is not fixed as it is dependent on the number of investors who want to invest in gold through DigixDAO.

However, considering the fact that DGX is not live yet, let’s talk about DGD.

According to CoinMarketCap, the total circulating supply of DGD is 2,000,000 DGD and the current price of each unit is $38. That values its market cap at approximately $77 million (at the time of this article).

Where To Buy DGD & DGX

Buying these tokens is not a problem at all as they are Ethereum-based tokens with sufficient liquidity.

DGD is available on the following exchanges:

  • Binance: Supported pairs are DGD/BTC, DGD/ETH
  • Huobi: Supported pairs are DGD/BTC, DGD/ETH
  • Gate.io: Supported pairs are DGD/BTC, DGD/ETH
  • Livecoin: Supported pairs are DGD/BTC, DGD/USD, DGD/ETH
  • IDEX: Supported pairs are DGD/ETH

DGX is available on the following exchanges:

 

Note: Buying DGD in fiat currencies such as USD, EUR, or GBP is currently difficult.

DGD & DGX Tokens Wallets

DGD & DGX Tokens are ERC20 tokens so you have plenty of options for storing these tokens safely. Some of these options have been listed below and will help you keep DGD & DGX Tokens safe.

Future Of Digix

DigixDAO has sky-rocketed from $3 to $200 in a matter of 18 months, a number hard to ignore. It currently stands at $38.

Moreover, the team looks impressive enough to deliver on their promises.

If you look deeper, you will also see that their future plans are also very interesting. Some of those include:

  • Wealth Inheritance system
  • Escrow solutions
  • Crowdfunding
  • Gold back crypto development
  • Wealth management through hedging
  • P2P lending and Microfinancing etc…

Also, since the US got off from the gold standards in the 20th century, we are still mid-air, pegged to USD which is inherently risky.

That’s why projects like Digix will pave the way for digital currencies backed by an actual asset that is gold.

I am highly positive about the project but if the project fails to keep its transparency and legitimacy in various human-handled processes, it will lose its charm.

Lastly, if they can somehow make the protocol processes more automated and self-managed by IoT devices, they will have all the more reasons to be successful as it will open up the way for the tokenization of many more precious metals and commodities on the blockchain.

Update: Their roadmap is live and it looks decent. And to my surprise, they are meeting the expectations on time with as well have started auditing their reserves. Here their latest audit report.

Let me know your thoughts in the comment section below and also let us know if you want us to cover a particular cryptocurrency.

Official Digix Resources

2 thoughts on “DigixDAO & Digix Gold: A Beginner’s Guide To Tokenized Gold”

  1. If you are buying it for the backing it is priced at around 5 times the price of the gold backing when selling for $200. You can not have a completely decentralized assett. You have to store it someplace. You can not offer 100% security of the assett. There is still TRUST involved. You need a trustless system or you might as well put it in your back yard. At least you’ll know it’s there. If it drops to $40, maybe I’m a buyer.

    1. Sudhir Khatwani

      HELLO @LEE, I agree and that’s what I have mentioned also in the conclusion as there are a various human handled processes involved which force you to trust someone in one or the other way. But I think IOT or ML might provide some solution.

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