Why Is a Gold-Backed Cryptocurrency So Important Today?

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The global economy has been struggling with the effects of the COVID-19 pandemic and now all the attention turned to the ongoing conflict between Russia and Ukraine. Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), warned in a speech at the World Economic Forum (WEF) in Davos that the economy faced the “biggest test since the second world war.”

The stock markets are bleeding, the cost of living in Europe is surging, and investors are surrounded by uncertainty, as major central bankers, including the US Federal Reserve and the European Central Bank (ECB), have to address the inflationary pressure while not deepening the potential recession.

For investors, this is a difficult period because it’s hard to know which way to go. This is why safe-haven assets are essential right now.

With inflation peak at 8.5% in the US and 9.0% in the UK, national currencies are devaluing in real-time. Investors need reliable assets that would preserve value in the long term, and gold has traditionally been the best option. In March, the precious metal saw its price breaking above $2,000 for the first time since August 2020, almost updating the all-time high.

Gold can indeed hedge against any potential hyperinflation, which is why many investors prefer to get exposure to it. However, both institutional and retail investors invest in gold derivatives (such as futures and options) given the complexities related to buying and storing physical gold.

Asia Broadband, Inc. (OTC:AABB) proposes an even better solution by offering a gold-backed cryptocurrency. It combines the benefits of gold – such as preserving value thanks to its scarcity – with the features of blockchain, including decentralization and unmatched security.

Asia Broadband Offers Unique Gold-Backed Coin

Last year, Asia Broadband – a well-established resource company that produces and sells precious metals to Asian and global markets – launched AABB Gold (AABBG), a cryptocurrency that is backed by $30 million of its gold bullion. The company is working to make its gold stablecoin a global standard of exchange. The cryptocurrency is gaining trust thanks to its unique mine-to-token vertical integration.

At the token launch in 2021, 5.4 million tokens were distributed at 0.1 gram of the price of gold, establishing a price of about $5.60 for each AABBG token.

To accelerate the adoption of its gold-backed stablecoin, Asia Broadband has been building an entire ecosystem around it, which includes the AABB Wallet and the exchange platform known as AABB Exchange. The exchange lists over 400 cryptocurrencies and 80 trading pairs. The company is now working on a payment gateway called PayAABB. The new product, which is expected to launch in the upcoming months, will enable merchants worldwide to accept crypto payments.

Why Is Gold-Backed Crypto Essential?

Following the start of the COVID-19 pandemic, central bankers were forced to cut interest rates to record lows in an effort to support investment and consumption. The resulting low interest rate environment has prompted investors to seek yield-generating opportunities elsewhere, such as the emerging decentralized finance (DeFi) sector. The rise of DeFi has consolidated the case for digital assets, and they are integrated into the traditional economy as well, especially for use cases like payments, asset management, and remittances, among others.

Stablecoins play a leading role in crypto adoption, as they address the volatility risk. However, the recent crash of TerraUSD (UST) – a USD-backed algorithmic stablecoin – has caused turmoil in the crypto market, triggering a massive selloff, with $1 trillion in aggregate market cap being wiped out in a matter of days.

The surprising collapse of UST highlighted the need for stablecoins backed by real-world assets. USD-backed tokens like USDC and USDT have been able to keep their price close to the $1 mark thanks to their different model that relies on reserves consisting of dollar-denominated assets.

A similar approach is used by AABBG. However, unlike USDC and USDT, which are pegged to a national currency that is already devaluing due to high inflation, AABBG is backed by the scarcest asset in the world that has passed the test of time.

AABB’s Gold Token is the most reliable asset for the crypto world as well as for traditional finance, which needs stability and economic growth.

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