Are Asset-Backed Altcoins the Future of Cryptocurrency?
A common criticism of cryptocurrencies is that they are not backed by anything and they do not have any intrinsic value, therefore they are worthless. This criticism is used by many crypto skeptics around the world. Many crypto believers argue that this is not true. They say that the underlying blockchain technology that cryptos use and the fact that they are digital currencies that cannot be double spent or hacked gives them intrinsic value.
The debate about cryptocurrencies’ intrinsic value rages on. However, regardless of what the exact intrinsic value of cryptocurrencies is, a new trend in cryptocurrencies could change the entire future of cryptocurrencies and how their value is perceived. This trend is asset-backed altcoins.
What are Asset-Backed Altcoins?
Asset-backed altcoins are cryptocurrencies that are pegged to a specific asset such as gold. There are a number of these asset-backed altcoins that are already available for trading on the crypto markets. For example, Pecunio is an asset-backed altcoin that is backed by gold. Every Pecunio Gold Coin (PGC) is backed by one gram of gold. People who own PGCs can trade their tokens in for the corresponding amount of gold at any time.
There are a number of gold-backed altcoins that have been launched. Pecunio is just one example. However, gold is not the only asset that is being used to back cryptocurrencies. Diamonds are also being used. There is a coin called Sparkle coin, which is backed by diamonds. Every Sparkle coin is backed by $5 of diamonds. So, people who prefer diamonds over gold can trade Sparkle coins.
The Significance of Asset-Backed Cryptocurrencies
Many people worry that because the intrinsic value of cryptocurrencies is uncertain, the crypto markets will always be volatile and unpredictable. This can be a turnoff to many investors. The introduction of asset-backed altcoins could potentially resolve some of the volatility in the crypto markets. Having cryptocurrencies tied to tangible and desirable real world assets helps to provide a legitimacy and a sense of stability that the crypto markets have been missing up to this point.
If asset-backed cryptocurrencies start to do well, then they could represent a distinct change in the development of the cryptocurrency sector. It is uncertain at the moment whether or not asset-backed cryptocurrencies will start to overtake the original cryptocurrencies. However, it is clear that asset-backed cryptocurrencies will at the very least serve as a more stable alternative crypto investment for investors who are risk wary and who do not have complete faith in the top unbacked cryptocurrencies. This alone could be a very positive thing for the cryptocurrency sector.
