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Cryptos Backed by Gold? Caution! These 6 Coins Only Sound Like They Are.

2y ago

bullish:

bearish:

Investors should always be leery of any investment that has the name “gold” in it. It may only be there to signify that the creators of the crypto think the project is high quality like gold. There is most likely no intention of backing every issuance of the crypto tokens by gold. In effect, these are gold-backed cryptos in name only.

Another major problem with these cryptos is that they have very small market caps and trading volumes. This makes the subject to a great deal of volatility, more than the average crypto, which is saying a lot.

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Let’s dive in a take a quick look at these cryptos.

Ticker	Currency	Current Price
AGLD-USD	Adventure Gold	$0.5162
BTG-USD	Bitcoin Gold	$22.61
GCR-USD	Gold Coin Reserve	$1,534.34
GLD-USD	GoldCoin	$0.02136
ETGP-USD	Ethereum Gold Project	$0.0001761
ETG-USD	Ethereum Gold	$0.01028

Adventure Gold (AGLD-USD)

Market Cap: $36 million

Adventure Gold (AGLD-USD) has no physical gold backing. It’s designed to hold “loot” gear related to non-fungible tokens (NFTs), not gold. Coinmarketcap.com says it’s the native ERC-20 token of the Loot NFT project.

Therefore, even though it has the name gold in its title, this particular crypto has no real relationship with backing by physical gold. That can potentially deceive some people into thinking it has solid backing.

Bitcoin Gold (BTG-USD)

Market Cap: $396 million

Bitcoin Gold (BTG-USD) was spun-off, so to speak, in a “hard fork” from the Bitcoin platform in 2017. But, again, despite its large market cap, this cryptocurrency does not have a physical gold backing. So the Bitcoin Gold name is misleading and investors should beware of thinking that it is some sort of stable coin that has any relationship to physical gold.

This misnomer may not be intentional, according to Goldscape.net. It isn’t pretending to have a link to the value of gold. For example, Visa or Mastercard Gold Card don’t pretend to be gold-related. Its goal seems to be a better Bitcoin (BTC-USD) platform with faster and more efficient Bitcoin mining and validation protocols.

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That is a lot different than being one of the cryptos backed by gold.

Gold Coin Reserve (GCR-USD)

Market Cap: indeterminate

Gold Coin Reserve (GCR-USD) has an indeterminate market cap, as a number of sites like Coinmarketcap cannot verify its essential market valuation. That means that despite its elusive name as gold-related crypto, investors should not think it has physical gold backing.

GoldCoin (GLD-USD)

Market Cap: $935,000

Some people say that GoldCoin (GLD–USD) is a “digital” gold coin. That, by definition, means it does not have physical gold backing. However, it was created in 2013 by an anonymous person and its real focus is not clear going forward.

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This is a very small, micro cryptocurrency. It is not suitable for any but the most speculative of investors who have some insight into cryptocurrencies and blockchain platforms.

Ethereum Gold Project (ETGP-USD)

Market Cap: $1 million

Ethereum Gold Project (ETGP-USD) is a small market cap crypto project that has no physical gold backing, despite the implication in its crypto name. Ethereum Gold Project describes itself as a smart-contract governed ecosystem that applies blockchain technologies using the value of gold. Note that this does not mean it is backed by physical reserves of gold.

As a result, only the most speculative of investors should even consider investing in this cryptocurrency. It might have a huge upside if its gold-related protocols boost its value. But its inherent volatility and opaqueness to defensive investors should cause them to only invest in it as they would consider investing money in a craps table game, for example.

Ethereum Gold (ETG-USD)

Market Cap: $207,000

Ethereum Gold (ETG-USD) is a super small cryptocurrency. Just like Ethereum Gold Project, does not have the physical backing of gold reserves. Ethereum Gold has a goal or focus to decentralize payments of companies and communities using the ETG Pay service and paying with ETG and ETGP tokens.

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Note that Ethereum Gold has nothing to do with physical gold backing. Its goal is to emulate at best the movements of gold in an Ethereum platform. As such, only the most non-defensive investors should even consider investing in this cryptocurrency as its upside could be quite volatile.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.