DigixDAO Cryptocurrency Review
What is Digix?
Digix allows buying gold in cryptocurrency and basically tokenized actual gold so there will be no need to store or to own it.
There are two major cryptocurrencies: Digix Gold (DGX) and DigixDAO (DGD).
The goal of the DigixDAO is to create an actual gold based cryptocurrency, the first of its kind. Digix Decentralized Autonomous Organization or DigixDAO has a sole purpose of establishing a global ecosystem. With that view in mind, the first crowd-sale was performed to take participants.
How does it work?
It works in a simple manner. The clients who hold the DGD token take part in decision-making protocol. The reward for any decision making is returned with DGX, a token equivalent to 1 gm of gold. This will store the value in the cryptocurrency space and provide stability in the process. The term “digital gold” gets proper meaning with DigixDAO.
Proof of Asset
Digix operates under Proof of Asset (PoA) protocol to distribute the DGX tokens. Anyone with possession of an asset in the Ethereum blockchain gets PoA asset card and these cards are certified by certain entities in the network. Sequential digital signatures are used to certify the cards which are farther validated with documents, such as proof of purchase and deposit receipts. All the documents are permanently recorded in the Interplanetary File System.
A Smart Contract
The creation of DGX token may seem a bit complex for new users. When a smart contract receives a PoA card, DGX tokens are generated equivalent to 1 gm of gold. For example, if a smart card receives 10g of PoA card, 10 DGX tokens will be generated and sent to a wallet on the Ethereum network. There is no fractional equation as each DGX is always valued as 1g of gold. The storage and safekeeping of the tokens are associated with two sets of fees, demurrage (0.60%) and transaction (0.13%) fees. The reverse process is also available where DGX token is converted into PoA card and the card is used to withdraw physical gold bar.
The introduction of DigixDAO has given two significant advantages for the cryptocurrency community. Firstly, it is much easier to own and liquidate gold assets without spending much. Secondly, there is an additional stability for the cryptocurrency network. The DGX tokens are set to be launched by the beginning of this year.
Another advantage is that Ðapps (Decentralized Applications) can utilize DGX Gold for their peer to peer lending system. In short, a borrower can negotiate, via the network, on his rate of return, rather than rely on interest/yield.
This has already been done with Bitcoin and has its drawbacks due to cryptocurrency price volatility.
Network and Tokens
DGD token holders have the management power over the DigixDAO network. There are some confusions among the community about the reward system for the DGD owners. But the introduction of the DGX token will provide much more clarity about the DGD governance. Right now, there are 2 million DGD tokens in circulation. The network still needs more funding and participants in order to function properly. The success of the DGX token will result in the introduction of silver and other valuable metal based tokens.
In the Future
The possibilities of the Digix Global is limitless. The company wants to initiate Dead Man’s switch service to transfer assets to a preferred Ethereum address. The tokens will be sent to the address if the account is not used over a certain period of time. Digix also wants to provide more suitable and less volatile escrow services for clients and their assets. Other ideas such as lending and microfinance are also on the drawing board. Hopefully, with proper development and support, Digix can expand their service in the near future.