What is Tether Gold (XAUt)

The world is going digital, and societies are becoming cashless. With the continuous spread of cryptocurrencies and their use cases, the future of money is in crypto, as predicted by finance futurologists. 

Even though Bitcoin is well known and adopted by several crypto enthusiasts, other coins like USDT, USDC and XAUt, amongst others, continue to develop better characteristics to serve most financial needs. 

This article discusses key points around Tether Gold in the following structure.

Tether Gold (XAUt) is a stablecoin backed by gold. Each XAUt token is backed by one troy ounce (31.1035 grams) of gold held in a vault in Switzerland. XAUt is issued by Tether, the same company that issues USDT, another stablecoin pegged to the United States dollar.

XAUt was first launched in January 2020 to expose users to gold without owning and physically storing the precious metal. It is designed to offer the same benefits of owning physical gold, such as preservation of purchasing power and potential protection against inflation, but with the added advantage of trading it on cryptocurrency exchanges. 

XAUt operates on the Ethereum blockchain and is ERC-20 compliant. This means that it can be stored and traded using any wallet or exchange that supports ERC-20 tokens.

Tether Gold can be bought or sold on major cryptocurrency exchanges, and it can also be converted to physical gold upon request from Tether. However, Tether charges a small fee for the redemption process.

Tether Gold (XAUt) is a cryptocurrency launched by Tether Limited, which claims to be backed by physical gold reserves held in a Swiss vault.

The process of using Tether Gold begins with buying XAUt tokens from a cryptocurrency exchange or broker, which represents ownership of a certain portion of the gold held in the Tether vault. 

Each token has a corresponding value in gold, and the price can fluctuate based on the market demand and supply.

Users can then store their XAUt tokens in a digital wallet and use them for various purposes, such as trading, sending to other users, or simply holding for investment. 

Tether Gold eliminates the need for physical ownership of gold while providing a convenient and secure way to invest in this precious metal through a blockchain-based asset.

Ultimately, the value of Tether Gold is derived from the actual gold reserves held by Tether Limited and the market demand for the tokens.

Stablecoins are known for their stability, especially fiat-backed stablecoins. Tether Gold, however, has some potential benefits.

1. Stability

Unlike traditional cryptocurrencies that tend to experience volatility, Tether Gold is backed by actual physical gold held in Tether's reserves, making it less prone to wild price fluctuations.

2. Accessibility

Tether Gold allows investors to own gold without having to possess the metal or hold it in a bank physically. However, Tether Gold holders have ownership rights to specific gold bars and can identify the details with a unique serial number. 

As such, XAUt investors can even redeem their tokens into real gold by going through a verification process.

3. Liquidity

Tether Gold can be easily traded on cryptocurrency exchanges, providing investors with a liquid asset option. This gives investors a convenient way to invest in the asset without worrying about storage costs

4. Security

The gold reserves of Tether Gold are securely stored in a trusted Swiss vault, providing assurance to investors that their investment is secure.

5. Transparency

Tether regularly provides proof of ownership and fully-audited reports to demonstrate the legitimacy and transparency of its gold reserves. 

While Tether Gold preserves purchasing power and acts as a potential protection against inflation, it has a number of challenges which investors should not ignore.

1. Regulatory issues

The regulatory environment for cryptocurrencies and digital assets is still evolving, and Tether Gold may face challenges with regulators in certain jurisdictions.

2. Market competition

Tether Gold competes with other digital gold offerings, such as PAX Gold (PAXG) and DigixDAO (DGD), which may affect its market share and adoption.

3. Gold price fluctuations 

Although Tether Gold is backed by physical gold, the price of gold can still fluctuate, which may affect the value of XAUt, thereby negatively affecting the funds of investors in the domain.

4. Liquidity 

While Tether Gold can be easily traded on cryptocurrency exchanges, it may still face liquidity challenges if there is insufficient demand for XAUt.

5. Trust and transparency

Tether Gold's legitimacy and transparency have been previously questioned by some critics, which may affect the trust and adoption of XAUt.

It is important to note that investing in XAUt is not the same as physically owning gold, as the value of XAUt can still be affected by market conditions and the performance of the cryptocurrency market. 

Concerns of transparency surrounding XAUt are quite debatable. While Tether Limited provides Proof of ownership and fully-audited reports to demonstrate the legitimacy and transparency of its gold reserves, critics question the reports' veracity.

Everything being equal, always Do Your Own Research (DYOR) before venturing into any new domain.