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Beginner’s Guide to DigixDAO: Tokenized Gold on the Ethereum Blockchain

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Digix makes it possible to buy gold in an efficient manner via cryptocurrency by providing investors with a tokenized version of gold so you don’t have to physically own or store it. Digix has two cryptocurrencies, Digix Gold (DGX) and DigixDAO (DGD), each of which serves a key role in the structure.  The company proudly gets 99.99 percent of its gold from LBMA-approved refiners, with zero percent from fractional reserves, delivering confidence. With Digix, investors can take advantage of the stability and value of gold as well as the ease of cryptocurrency.

Digix DAO

Digix essentially tokenizes gold within Ethereum. It takes advantage of the Distributed Ledger’s immutability, auditability, and transparency, applying all these benefits to the precious physical asset of gold. Additionally, Digix has developed multiple technologies, such as the DGX tokens and proof-of-asset protocol (POA).

What Is the Distributed Ledger Technology?

For those in need of a quick review, Distributed Ledger Technology relies on the users to power a network via confirming transactions with a general consensus mechanism. All “blocks” containing information are stored chronologically and transparently on every computer.

Ledger

What Is the Proof-of-Asset Protocol?

Developed by Digix, the POA is a new system that proves the existence of an asset as well as its ownership within the distributed ledger. At each step of the process, proof records are published permanently with IPFS and Ethereum.

What Sets Digix Apart?

The biggest difference between Digix and other existing investment options is the fact that this system issues the allocated bullion immediately from a point of digital purpose. This makes client ownership the priority, instead of the company as a whole. Additionally, Digix manages to take the stability of gold but add liquidity. When you secure bullion, it is notoriously challenging to use and trade. With Digix, however, the gold can become liquidated, letting investors use it in daily life while still enjoying its physical security.

What Are Some Other Key Features of Digix?

Another key feature of Digix is its physical gold bullion. By investing, users buy bullion from the LBMA refineries, including the Assay Certificates from refiners like Nadir Bullion, PAMP Suisse, Valcambi, and others.

For security, Digix includes third-party auditing from Bureau Veritas. Every quarter, it audits each gold asset within the safehouse vaults. This auditor has been in business since 1828 and is a world leader in certification, inspection, and testing services. With such a long track record, investors should be able to trust Bureau Veritas for their auditing services. Finally, Digix involves recast, which means customers can take their DGX delivery at the partnering custodial vault.

Bullion Custody

It is also worth mentioning that by investing in Digix, contributors are investing in gold and can take advantage of its proven long-term stability. In other words, Digix can be used to diversify cryptocurrency portfolios and help provide protection from the inherent price volatility linked to both digital and real-world assets.

What Are DGD Tokens?

DGD tokens work closely with DGX ones. Users will be able to claim quarterly rewards in DGD based on the total amount of DGX that was collected in the form of transaction fees. DigixDAO is a self-governing community that uses the DGD tokens and contributes to the Digix ecosystem. You use DGD tokens to pledge on the various DigixDAO proposals, working toward the goal of increasing the adoption of DGX. Additionally, holders of DGD who grow the Digix ecosystem by rejecting and supporting proposals will get rewards. In total, there are 2 million DGD tokens. To acquire DGD, you must buy it on exchanges that focus on cryptocurrency, so you cannot purchase it using fiat currency.

DGD Tokens

While you can redeem DGX tokens for gold, that is not possible with DGD tokens. Instead, DGD tokens entitle you to voting rights for proposals submitted that will grow the Digix ecosystem.

Upon the release in March 2016, DGD tokens represented the first crowdsale within the Ethereum blockchain. It beat expectations and met its target of $5.5 million USD in just 12 hours. With the success and launch of DGD or DigixDAO, the first major distributed autonomous organization on Ethereum was created.

What Are DGX Tokens?

The DGX tokens are those that directly tokenize gold. Every DGX token represents a gram of the 99.99 percent LBMA standard gold that is secured within Safehouse vaults. Investors can also redeem 100 DGX tokens for physical gold (100 grams) via mail or in person. Digix sees DGX as the future gold standard used for value exchanges within the Ethereum ecosystem. The DGX token includes on-chain proof of auditing, is fully allocated, and has no fractional reserve. It will be released by the end of this first quarter of 2018. DGX is only available in the Digix marketplace, where you can buy it with Ether upon release.

DGX Tokens

DGX tokens are within the Ethereum EIP20 format, making it possible to seamlessly use DGX for Ethereum contracts that involve anything. You will be able to use it for daily transactions, like buying coffee, via NFC. Digix sees extensive use cases for DGX, including rentals, commerce, wealth management, lending, retail, and salaries.

How to Buy DigixDAO DGD Tokens

You are not able to purchase DGD with “Fiat” currency so you will need to first purchase another currency – the easiest to buy are Bitcoin or Ethereum which you can do at Coinbase using a bank transfer or debit / credit card purchase and then trade that for DGD at an exchange which lists the token. Read on to see how to purchase it.

Register at Coinbase

For first time buyers of crypto currency, we recommend that you use Coinbase to make your first purchase – its easy to use, fully regulated by the US government so you know it is one of the safest and most reputable places to purchase cryptocurrency from. Coinbase offers the ability to purchase Bitcoin, Litecoin and Ethereum with a credit or debit card or by sending a bank transfer. The fees are higher for cards but you will receive your currency instantly.

You will have to carry out some identity verification when signing up as they have to adhere to strict financial guidelines.

Make sure you use our link to signup you will be credited with $10 in free bitcoin when you make your first purchase of $100.

Coinbase Website

To get started, click the “Sign up” button where you will be taken to a registration form where you will need to enter your name, email and choose a password.

Purchase Ethereum

In Coinbase, visit the “Buy / Sell” tab at the top, select “Ethereum”, choose your payment method and enter the amount you wish to purchase – you can either enter a US Dollar amount or a number of Ether.

Buy Etherum

You will then be asked to confirm your transaction, if paying with a card you might have to complete a verification with your card provider. Once that’s complete, your Ethererum will be added to your account.

Purchase DGD at Binance

You can now send your Ether over to Binance to make your purchase of DGD take a look at our review of Binance here to see how to signup and purchase on their exchange.

Binance Wallets

DGD is also available on the following exchanges

What Is the Digix Marketplace?

Digix already has its own demo version of a marketplace. The early version can show the core marketplace functionality. The team is still working on developing backend software for the POA protocol and on making the marketplace more visually appealing. They encourage feedback to help them create a marketplace that users appreciate. This beta marketplace is on Kovan, so you need Kovan Ether to buy the test DGX tokens within the marketplace.

Marketplace

Conclusion

With Digix, token holders can invest in gold and take advantage of its long history of stability without having to physically buy gold. Instead, the system tokenizes gold. It manages to have every single token backed by physical gold, unlike existing systems that have reserves or cannot prove that they actually have the physical assets in place. Digix plans to make it possible for token holders to use their gold-backed tokens in daily transactions just like they would any other cryptocurrency, revolutionizing the way we invest in this precious metal.

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Editor-in-Chief of Blockonomi and founder of Kooc Media, A UK-Based Online Media Company. Believer in Open-Source Software, Blockchain Technology & a Free and Fair Internet for all. His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More. Contact Oliver@blockonomi.com

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