Stablecoins are seeing a surge in popularity, seemingly as a response to volatility concerns in the crypto trading markets. Unlike conventional cryptocurrencies, stablecoins are backed by tangible assets like precious metals or fiat money. 

Websites like goldexchange.com have made it easy to purchase gold and silver backed stablecoins like the Perth Mint Gold Token, backed by gold from the Perth Mint, and Gold Coin. 

Because the market value is not solely dependent on popularity and interest in the coin, it is rare to suffer a significant loss when trading precious metal-backed stablecoin; the virtual tokens never fall below the underlying asset price while still carrying the possibility of substantial financial gain.

More and more people are turning to precious metal-backed stablecoins for their versatility and reliability. So, while some laud Bitcoin as the currency of the future, precious metal-backed stablecoin may be hot on its tail.

How Did Precious Metal-backed Stablecoin Come to Be?

While stablecoin is new to the playing field-it emerged in 2015-it has forebears in companies like E-Gold, who paved the way for successors like Gold Exchange to provide online platforms for virtual precious metal-backed crypto trading. 

The idea of E-gold was that users could purchase solid gold assets online. At its peak in the 1990s, E-Gold processed over $2 billion in spends yearly. The company was one of the earliest examples of e-commerce or online payments of its kind. Due to legal issues, the company dissolved and became virtually non-existent by 2009.  

In recent years, the desire to invest in bullion online has resurfaced, mainly due to concerns about the volatility of decentralized cryptocurrencies like Bitcoin. Websites like Gold Exchange now allow users to purchase gold and silver-backed coins using a debit or credit card and offer an app to facilitate trading and storing virtual gold coins.

How Does Precious Metal-backed Crypto Trading Work?

Like any practice, trading gold and silver-backed crypto come with a learning curve. Platforms like Gold Exchange make a point of easing the trading process by implementing a user-friendly interface that allows users to assess market value via a dashboard easily.

Traders simply need to choose which assets to invest in based on Gold Exchange's information and purchase virtual gold or silver tokens with their credit or debit card. 

From there, users can organize and track their investments via Gold Exchange's wallet app. In the wallet, users can see a grand total of their investments and customize profit and loss margins to avoid trading mishaps. 

Trading precious metal-backed crypto offers more stability than trading traditional crypto. However, the two can work in tandem; many users trade Bitcoin into stablecoin to protect their assets from price swings.

Benefits of Precious Metal-backed Stablecoin over Traditional Cryptocurrency

Stablecoins are designed to do just what the name suggests-remain stable. Because reserve assets back them, precious metal-backed stablecoins maintain their price and are not subject to the extreme volatility typical of traditional cryptocurrency markets.

The main appeal of cryptocurrencies like Bitcoin or Ether is that by using blockchain technology, it becomes is impervious to interference from the government or other centralized authorities. But unlike stablecoins, cryptocurrencies like Bitcoin do not have their value lying in material assets; their worth is determined solely by their ability to be exchanged. In other words, traditional crypto can be seen as having no intrinsic value; its value is determined by theoretical interest.

One of the challenges of trading traditional crypto is knowing when to buy and sell. The market is subject to frequent price swings, opening avenues for heavy financial loss. Because of such high volatility, making significant profits trading crypto like Bitcoin usually requires full-time attention and dedication.

Precious metal-backed stablecoins resolve this issue. Due to much lower price fluctuations, users can take a more relaxed approach to crypto trading. In short, stablecoin is the better choice for the risk-averse.

Both Bitcoin and stablecoins carry the potential to move us from under the thumb of centralized banking authorities into the world of autonomous online commerce. However, with lower volatility and more potential to substitute traditional money, stablecoin looks poised to take over as the currency of the future.