what is digital gold?
In: 2
I’ve seen this phrase used in a couple of different ways.
Firstly, there are some companies that sell digital certificates which purport to give you ownership of some gold bullion, so that you can trade gold without actually having to take physical possession of it. Some of these companies are pretty sketchy, and it can be unclear whether the holder of the “digital gold” really does own the gold or what happens if the company that physically stores the gold goes bankrupt or loses it somehow. In some cases it’s unclear if the gold even exists.
Secondly, it has been used as a slogan for a theory about why cryptocurrencies have value. A unit of cryptocurrency is just an entry on a ledger with no inherent meaning or purpose. This is in contrast to ordinary currencies, which have value because of their legal status (e.g. you have to pay taxes in them) or, historically, because the coins contained precious metals. The idea is that cryptocurrency has a reputation for being a safe store of money, like gold, so people value it for that reason – metaphorically it’s “digital gold”. The obvious problem with this theory is that, in fact, cryptocurrencies have notoriously unstable prices and occasionally become worthless overnight.
Latest Answers