Finance, Industry, Markets

DigixDAO (DGD) To Bring The Gold Market Into The Blockchain Game

DigixDAO (DGD) is a new blockchain platform based on the Ethereum Network as an ERC-20 token. Their vision is to implement the traditional gold market into the new industrial era. One of their main tokens DGX will carry 99.99% of the value 1 gram of gold carries at the moment of the trade. Then DGD is their digital token used in reward systems and voting on DigixDAO, with its value ranging according to standard cryptocurrency markets.

Historically, the value of gold was rooted in its relative rarity, easy handling and minting, easy smelting and fabrication, resistance to corrosion and other chemical reactions (nobility) and its distinctive color. As a precious metal, gold has been used for coinage, jewelry, and other arts throughout recorded history. In the past, a gold standard was often implemented as a monetary policy, but gold coins ceased to be minted as a circulating currency in the 1930s, and the world gold standard was abandoned for a fiat currency system after 1976.

Since then we have changed our basic monetary systems in many ways, gold became paper, paper became fiat currency, fiat became storage value through banks and then plastic, plastic shifted into digital (as on e-banking services) and today we are trying to do this again on a deeper scale, where monetary systems will be fully decentralized in a series of blockchain platforms, losing the need for a centralized bank or a monetary institution to support and approve “value”. DigixDAO (DGD) will combine physical and digital assets into a blockchain based ecosystem.

Most cryptocurrencies use proof of work or proof of stake as the basis of their monetary platforms, however, that causes a high level of insecurity since they’re basically representing “thin air”.

As blockchain technology evolves, 3d and 4th generation blockchain startups begin to understand what was wrong with primitive blockchain platforms such as Bitcoin and they are trying to avoid or sometimes solve these problems.

Platforms like IOTA, Walton, INS, Zenome among others are already focusing on solving real-life global scale problems working directly with fields that desperately seek a breakthrough into the new era of technological advancement. DigixDAO could also be one of these platforms. Let’s see why:

Digix provides a use case for the tokenization and documentation of physical assets through its Proof of Asset (PoA) protocol. The PoA protocol utilizes the Ethereum Network and the InterPlanetary Files System (IPFS) to track an asset through its chain of custody. This allows for the open and public verification of an asset’s existence without a centralized database. Digix also offers an API allowing other applications to be built on top of our asset tokenization service.

Key Products :

1. Proof of Asset (PoA) Asset Cards

PoA Asset Cards consist of the below information permanently uploaded onto the
decentralized database:
– Time Stamp of card creation
– SKU of the gold bar
– Bar Serial number
– Chain of Custody digital signatures (Vendor, Custodian, Auditor)
– Purchase Receipt
– Audit Documentation
– Depository Receipt
– Storage fees due

2. Digix Tokens (DGX)

Dgx Tokens are minted via a Minter Smart Contract. Each DGX token represents 1g of
Gold and divisible to 0.001g. For every PoA Card that is sent to the Minter Smart
Contract, DGX tokens will be issued in return. For instance, a 100g PoA Card sent to the
Minter Smart Contract returns 100 DGX tokens to the user. PoA Asset Cards, as well as Digix Tokens, are both held in an Ethereum Wallet.

Digix’s Proof of Asset Participants :

Asset Vendor
ValueMax Singapore, a publicly listed company, supplies London Bullion Market Association (LBMA ) certified gold bullion bars through the Digix Marketplace. Established in 1988, they provide pawnbroking services, retail and trading of pre­owned jewelry, gold and luxury timepieces.

Independent Auditor
Bureau Veritas Inspectorate will carry out quarterly checks on the quality and quantity at our custodian vault to ensure accounting is upheld. They are a multinational group with capabilities in an extensive range of commodities, providing independent inspection, sampling and testing services of precious metals. Every gold bullion is rigorously tested with precision instruments at Audit. We perform such measurements using Ultrasonic Gauge Measurements (UTM) and densitometers. UTM is a method of performing non­destructive measurement (gauging) of the local thickness of a solid
element basing on the time taken by the ultrasound wave to return to the surface. Densometers are devices that measure the density of objects with water displacement.

Participating Custodian Vault
Malca­Amit’s state of the art facility near Singapore Changi International Airport is located in the Le Freeport of Singapore, a 25,000 sqm high­security and climate­controlled facility featuring cutting edge security technologies enhanced by green building engineering.

The Digix system relies on multiple independent participants to provide a transparent platform for the tokenization of physical assets. We can assume that miners in a Proof of Work-based crypto­currency system will act rationally, that is, that they would act in a way to maximize and protect their long-term profits by performing their role of transaction verification. We assume that a cartel of rational miners would not collude to perform double spending attacks as such attacks would cause reputational damage to the entire system. We must, therefore, assume that in the Digix system which is the tri­party system consisting of asset providing vendors, the asset custodian in charge of storing and securing the asset from theft, and the auditor in charge of ensuring the authenticity of the reported assets in custody are all acting in a rational manner who are trying to maximize their profits from the fees that they collect for their service.

Could DigixDAO change or stabilize the economic wars ongoing inside the crypto-sphere? Let me know what you think in the comments below.

Reporting for The Independent Republic, Ross Peili

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