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For years now, almost as far back as people can remember, people have been using physical objects as a source of money. A person’s assets could be contained in objects such as artwork, property, cars etc., but most commonly people used precious metals such as gold and silver to represent how much money they had, and as a way to trade.

This choice of precious metals as forms of currency does not really come as a surprise, as it has many attributes which makes it perfect for the job.

Firstly, it has value on its own, as some precious metals are very scarce or rare, giving them value. They are durable and easily transported, and can easily be melted down and moulded into the required shape to be used as currency.

Gold could be considered the most desirable of precious metals, as not only does it have a high value, but it also meets all the attributes needed to be a form of currency.

Although gold has been used for a millennia, is the time coming when gold is no longer the main form of currency? The blockchain is becoming a more and more popular way for people to store their assets. Some would describe the blockchain as the future of money.

The bitcoin, or crypto currency, was created in order to place gold in this digital age. As more and more factors become computerised, people are dealing with physical money less and less. People want to deal with a digital currency, something that can be used quickly and easily online, without the need of a physical asset, of which can easily get lost, stolen, or be involved in fraud in some way. While this network is still growing, as with most things in life, its future is uncertain.

One company, called DinarDirham, which recently opened office in Singapore has created a digital currency based on gold’s spot price. The purpose of such a currency is meant to help guard against volatility in the digital currency field and bring stability and reliability. They saw the value in Ethereum’s blockchain technology, and solved the problem of volatility by building a digital currency on it as a store of value.

“Digital currency is a new asset class with a big problem: volatility. DinarDirham aims to fix that with DinarCoin — a gold-backed digital currency. Distributed ledgers such as Bitcoin blockchain or Ethereum blockchain contain a certain and verifiable record of every single transaction ever made. With inherent capabilities of this new technology, other issues like transparency and security are being fixed,”  said Stelian Balta, CEO of DinarDirham, a gold and investment solutions provider.

At the moment gold is holding its place as a form of money, but who knows how long this will last. The majority of people still prefer to trade with physical assets, yet more and more people are seeing the benefits of using a digital currency.

At the moment, there are still in-between types of companies, that allow for digital access to physically stored gold, working much like a normal bank would, only your assets are gold instead of paper. One of the oldest of these companies is called Goldmoney, which allows you to buy, sell, and hold physical gold. You can then convert your gold balance to use on a type of credit card.

There’s one problem with this approach though… there’s still a middle man. Crypto-currencies, and gold-back blockchains will have this problem.

In some ways, many forms of cryptocurrency, including the bitcoin, have been made with some very obvious similarities to gold. Both bitcoins and gold are completely durable. A bitcoin requires miners and the Internet in order to be used, if the Internet is lost, then users have a problem. Gold in comparison will start to wear away eventually if it is not handled carefully.

Both are transferable but in different ways, a bitcoin can be sent from one address to another in a matter of seconds, it takes literally seconds to exchange hands and belong to someone else. Gold in comparison has to be physically transferred, and if people are not physically there to make that transaction, it could take a lot longer than a blockchain transaction.

Both forms of currency can be divided, but gold cannot be divided as easily as currency that forms blockchains, as they can be quickly divided to the exact amount and in a much simpler way. Both forms of currency are also scarce.

The amount of gold that is available in the world mainly depends on how much effort is put into finding it and bringing it into circulation. In terms of the bitcoin, only 21,000,000 bitcoins will ever be released, over half of which have already been released. Once these have all been released, there will be no way to bring more into circulation. It is possible for gold to be replicated or manipulated in some circumstances, and therefore more liable to fraud. Whereas it is impossible for the bitcoin to have counterfeits made as it is so easily recognisable.

“The primary expense that must be paid by a blockchain is that of security,” sayd Vitalik Buterin, Co-founder of Ethereum.

One of the main differences is that currency exchanged on a blockchain can always be tracked, every transaction is stored therefore it is possible to know where every bitcoin is at any given moment, and the transactions that it has been through in the past are also recorded and can be seen at any time.

Gold in comparison is not so easily tracked, as it can exchange hands without anyone knowing, or alternatively melted down and turned into something else.

One company called DIGIX has created another way to have your gold digitised, similar to DinarDirham. Built on Ethereum’s platform, they use Ethereum’s blockchain technology to create gold-backed tokens. They are blockchain based crypto-assets. This eliminates the need for a middle man, and makes your assets much more accessible and secure.

Digital assent managements is one of the most promising applications of blockchain technology. In the future, it could be possible for everyone to be able to store their assets online in a blockchain. Fundamentally making the use of gold redundant. This outcome is definitely fairly far into the future, as many people do not even understand what a blockchain is and how it works, let alone willing to use it to store their assets.

People are used to using gold and paper assets as their main form of currency, so in order to change this and make assets purely digital would change things up a great deal, and certainly make people unsure about how safe it is.

People are scared of change, so this will not be something that happens overnight, yet as more and more people learn about and understand how cryptocurrencies such as a bitcoin works, they may be more willing to utilise the many functions of a blockchain.

Check out my latest research on two of the most powerful blockchains on the market. Blockchains certainly look promising for the future of banking and digital assets.

The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your article here.