what is digital gold?


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.

There is no such thing as digital gold, its mainly used as a marketing phrase for cryptocurrencies, especially Bitcoin. And like many marketing phrases it is misleading, as these crypto-coins don’t have much in common with gold at all.

nothing. marketing speech.

often companies collecting user data or cryptocurrency scammers use terms like this.

the first one because it is sought after by those willing to pay money for it.

the latter because they want it to be sought after by those willing to pay money for it.

Long before bitcoin was created and even before PayPal, there was a [company that promised to store gold](https://en.wikipedia.org/wiki/E-gold) for people and allowed them to hold gold purchased from them in the form of a easy to trade anonymous online currency. The company produced a form of digital gold.

Just like cryptocurrencies today they were a magnet for crime and frequently used by criminals attempting to hide transactions, but they also served legitimate customers with the first successful online payment system. Eventually the laws were changed that made continued operations impossible, and before they could return in a form that would comply with the laws, cryptocurrencies had filled the niche.

gold derives its value from being a rare and heavy element. The only explanation I could possibly think of, assuming that your premises are correct, is that digital gold is gold that is incorporated into the hardware of important networks.