Economics

Gold-Backed Vault Shows What the Future of Cryptos Might Look Like

What happens when the newest investment class is combined with the stability of the world’s oldest investment class? It could be what’s needed to get would-be crypto investors from standing on the sidelines.

Volatility has understandably kept a lot of people from investing. Even the biggest and well-known cryptos have been vulnerable to extraordinary price swings, creating a feast for some and famine for others. There are now more than 1,600 known cryptocurrencies with an aggregate market cap of some $300 billion, rendering assessing the value of cryptocurrencies a constantly moving target.

Price parity with something as globally trusted as the dollar and the guarantee of being backed by gold may be what it takes in order to pique the interest of those who have tread lightly (or not at all) into cryptocurrencies. With the arrival of Vault, it appears that these investors have what they’re looking for.

Can Gold-Backed Stablecoins Get Latent Investors Interested in Cryptos?

Built and operated by investors, miners, financiers, and developers with backgrounds from major financial and academic institutions around the world, Vault has what it believes is a breakthrough antidote to price volatility in cryptocurrencies. The value of its stablecoin, USDVault, is 1:1 with the U.S. Dollar, and those who hold it at any time can redeem it for dollars or the equivalent dollar-value in gold, which is held in a vault in Switzerland.

The company operates not as a broker, but instead as a technology platform provider working with licensed fiduciaries that manage the funds directly. Vault never handles funds directly, and all activities Anti-Money Laundering- (AML) and Know Your Client- (KML) compliant.

Vault has a distinct appeal both to the traditional, heretofore crypto-averse investors as well as younger traders who have most of their investments in tech stocks and cryptos. For the traditional investors, it’s an opportunity to step into cryptocurrencies without being exposed to the volatility of traditional tokens. However, USDVault could also be a conduit for a creating a more extensive crypto portfolio for these types of investors.

For younger, and already crypto-exposed investors, Vault provides a great opportunity to hedge against the risk that’s inherent not just in cryptocurrencies, but other investment classes as well. The guarantee of gold provides the level of security and balance that’s needed in any sensible and mature portfolio.

But Vault is eager to also get the attention of crypto exchanges, which could offer USDVault as a standard stablecoin.

Vault is set to launch in the Fall of 2018, with the specific date still to be announced. 

If price stability has in fact been the hurdle keeping institutional investors from getting into cryptos, then Vault has a chance of making some serious noise in the space. With ties and partnerships with a range of major institutions like Goldman Sachs, JP Morgan Chase, Morgan Stanley,  Ernst & Young, Deloitte, and Rio Tinto, among others, Vault could very well become the stablecoin of choice among the institutional investors. It certainly has the pedigree.

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Patrick is a writer from Baltimore who covers finance, emerging technologies, startups, and culture. He previously worked as a managing editor at The Agora, one of the largest private publishing institutions in the world.

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