Digix Creates the Next Generation of Digital Gold
Starting in the mid-1990s, the terms “digital gold” and “digital gold currency” were used to describe digital currency systems with a centralized server and one or more identifiable points of failure. Throughout this first generation of digital currency platforms, when the server was eventually compromised, hacked, seized or destroyed, the digital assets were often lost forever. Little if any link remained between owner and asset. In addition to this risk, when the operating company absconded with the user’s cash or the bullion backing the digital units, once again, the online clients lost all of their considerable digital value. This last occurrence was all too often the case, as many popular digital gold currency businesses have disappeared over the years. Dating back to the 1990s, losses occurred for clients of Standard Reserve, e-bullion.com, Intgold.com, 1MDC, and others. Even Crowne Gold had their server hacked, and the intruder attempted to make off with more than $7 million in digital gold units. Fortunately, in that 2002 case the company management, with help from some industry friends, plugged the leak before the thief got a chance to exchange the digital units into national currency.
Today, a few of those old centralized digital currency platforms still exist. However, new blockchain technology has advanced us far beyond the old server model. Today’s digital gold moves effortlessly over the Ethereum Blockchain. This network is a robust decentralized digital platform for creating secure, audited digital value from offline physical assets.
No longer are digital currency users at the mercy of a single server or the promise that their offline assets will be “carefully” audited.
Today, the online community has Proof of Asset (POA) technology that records gold bullion ownership using Ethereum’s blockchain technology.
Proof of Asset (PoA™) Digital Ownership Certificates are Ethereum smart contracts for physical gold ownership that can be traded or transferred to any Ethereum address. These secure, auditable smart contracts easily circulate online, and because each token is distributed across the Ethereum network, ownership and value remain secure. These contacts are easily broken down into smaller units or combined into large ones. The Singapore business now producing digital gold smart contracts, along with and the exchange user interface platform for trading is Digix Global (https://www.dgx.io/)
Here’s how it’s done.
A PoA certificate, or card as they are known, is created representing ownership of an amount of gold bullion already on deposit in Singapore third party custodial vaults. The card is transferred to the owner’s account using the Digix user interface. The customer can then transfer the new digital asset to any other account on the Ethereum Blockchain. It can also be broken down into smaller units or added to other cards creating a larger unit. These digital units transfer securely and effortless on the Ethereum Blockchain forming a digital gold platform much more suitable than trading the actual physical. Digix uses three modular processes that provide the asset’s chain of custody.
Those processes consist of:
• The Proof of Asset (PoA) Certification process, which is used to create PoA Asset cards. The asset cards are certified using digital signatures from the chain of custody, which can be validated with proof of receipts.
• The Minter DAE (Decentralized Autonomous Entity) to create DGX tokens. It works by accepting PoA Certificates. It also allows users to issue divisible (DGX) Digix Asset tokens.
• The Recaster DAE, which is used to convert DGX tokens back into PoA Asset cards.
This platform creates divisible digital representations of gold bullion.
Although this PoA example discusses gold, this same procedure could be used for any other physical or digital asset. Digital gold smart contracts are just the beginning because the Digix platform can instantly marry any physical asset to an audited digital token converting it into a transferable digital asset. The units can be bought, sold, traded or stored by anyone located anywhere in the world. Funds settlement and global asset transfers can now take place without the cost or risk of moving the physical items. This new process from Digix is a significant improvement over previous digital gold products.
The industry has been quick to recognize the potential future for this new generation of digital gold and even the old school e-gold users like me, have taken notice and become one of the converted. These new Proof of Asset Ownership Certificates create a fully audited, incorruptible distributed database capable of precisely defining any of its smart contract transactions on the Ethereum blockchain.
The PoA Digital Ownership Certificates forged through Digix are the next generation of digital gold currency trading as Ethereum smart contacts. Each digital certificate carries a legally binding cryptographic identification of ownership. It’s important to remember that unlike the single server platforms of yesteryear, digital assets created on the Ethereum blockchain, cannot be altered, destroyed or compromised.
One of the more brilliant features of the Digix platform is the user interface. Through the user interface, assets can be broken down from large units into multiple smaller ones. If you have a kilo of gold bullion secured through a PoA certificate that card can be divided into 10 x 100gm digital contacts and sold traded or distributed. In fact, through Digix’s user interface, digital gold units can be as small as 0.001 of a gram making global e-commerce both convenient and efficient. Additionally, transactions between Digix accounts, whether it is digital gold or another future digital asset, generate no transaction fees for the sender or receiver. If you are sending a gram, the target Digix account will receive the full amount.
As the public begins to understand that a gram of digital gold in the United States is equal to a gram of gold in China; and that same digital gold gram is identical in every other country on earth, Digix’s new secure, audited PoA tokens should facilitate more efficient cross-border financial settlements.