Asset-backed cryptocurrency could satisfy traditionalists

One of the main arguments used by those people who do not support Bitcoin and other major today’s cryptocurrencies is that digital coins are not backed by any physical assets and do not have a centralized issuer. The situation might change once companies figure out a way to satisfy this demand for a stable and non-vague currency.

Two businesses claim they have already figured it all out and promise to launch their asset-backed coins soon. The first coin is developed by Diamundi and connected with very influential Russian businessmen. D1 Coin, as the founders titled it, will be backed by diamonds provided by the Russian Alrosa corporation. This currency’s value will be based on 1/1000 of carat of a reference diamond.

However, financial experts reading the previous paragraph might immediately remember the law of Copernicus and Gresham which can be retold as “bad money drives out the good money”, and that the current economy development is faster than diamond or gold mining, which is why major fiat currencies are not made of gold anymore, by the way. The founder of CPN Gold, a second company that has lately announced its intention to issue gold-backed cryptocurrency is well-aware of all this, too, but in an interview with the Russian RBK outlet, he claims to have found a way to bypass the law – the dynamic gold management system. When the demand for the currency grows, gold assets should be bought, and when it falls – sold. Every coin of CPN Gold is backed by 1 gram of gold, the company assures.

While the first project looks like it’s not going to bypass the law of Copernicus and Gresham, the second one at least tries to do so. Traditional market players should monitor projects similar to described above and see how the idea of asset-backed cryptocurrency works out.