asset-backed digital currencies tied to audited reserves
Who does the audit? I'm guessing Bhutan. What incentive does Bhutan have to cater to foreign investor interests?
Who/what determines the token values? Is it based on market demand for tokens or the market price of gold?
If the price of gold increases 50%, are token values guaranteed to follow suit?
I'm trying to understand the advantage here over ETFs which essentially offer digital gold --- reasonably audited in accordance with US law without physical possession and values tied strictly to the market price of gold.
gametorch•1mo ago
> What incentive does Bhutan have to cater to foreign investor interests?
Bhutan is actively encouraging foreign investment for obvious reasons. For example, see Gelephu Mindfulness City [1]. The King and his government have published their reasoning.
> Who/what determines the token values? Is it based on market demand for tokens or the market price of gold? If the price of gold increases 50%, are token values guaranteed to follow suit?
Yes. Presumably there is a redemption mechanism, providing arbitrageurs opportunities to close price discrepancies between the token and spot gold for a profit.
> I'm trying to understand the advantage here over ETFs
The vast majority of Earth's population doesn't have access to US-based ETFs. Second, if a significant amount of your assets are already on chain, it's painful to move them back to a fiat-based brokerage account to buy a gold ETF; you risk the whims of an arbitrary bureaucracy, frozen assets and delays over which you have no control.
jqpabc123•1mo ago
Who does the audit? I'm guessing Bhutan. What incentive does Bhutan have to cater to foreign investor interests?
Who/what determines the token values? Is it based on market demand for tokens or the market price of gold?
If the price of gold increases 50%, are token values guaranteed to follow suit?
I'm trying to understand the advantage here over ETFs which essentially offer digital gold --- reasonably audited in accordance with US law without physical possession and values tied strictly to the market price of gold.
gametorch•1mo ago
Bhutan is actively encouraging foreign investment for obvious reasons. For example, see Gelephu Mindfulness City [1]. The King and his government have published their reasoning.
> Who/what determines the token values? Is it based on market demand for tokens or the market price of gold? If the price of gold increases 50%, are token values guaranteed to follow suit?
Yes. Presumably there is a redemption mechanism, providing arbitrageurs opportunities to close price discrepancies between the token and spot gold for a profit.
> I'm trying to understand the advantage here over ETFs
The vast majority of Earth's population doesn't have access to US-based ETFs. Second, if a significant amount of your assets are already on chain, it's painful to move them back to a fiat-based brokerage account to buy a gold ETF; you risk the whims of an arbitrary bureaucracy, frozen assets and delays over which you have no control.
1. https://en.wikipedia.org/wiki/Gelephu_Mindfulness_City
jqpabc123•1mo ago
So risk without any real reward --- at least compared to gold ETFs in the USA.
gametorch•1mo ago
The blockchain in this context has no bureaucracy, no ability to freeze your assets, and no delays.
Fiat brokerage and banking accounts suffer all those properties.