As is the case with most currencies, to truly understand a coin one must first know what purpose it fulfills, and with the case of DigixDAO, one of the purest stablecoins on the market, knowing what it is, and adding it to your portfolio, is a must!
What is DigixDAO?
DigixDAO plans to create a new cryptocurrency backed by actual bars of gold.
That’s right. Backed by real gold.
The DGD token holders will make decisions related to any proposals submitted to DigixDAO. As a reward for voting and decision making in the growth of Digix, DGD holders receive rewards related to DGX.
The tokenization of gold aims to bring long-term stability to cryptocurrencies, something that could change the crypto-sphere altogether.
How does this stablecoin even work?
By using a unique consensus mechanism called Proof-Of-Asset (POA), the DigixDAO ecosystem validates and confirms the possession of an asset on the Ethereum blockchain through the creation of PoA Asset Cards.
“The asset cards are certified using sequential digital signatures from the entities in the chain of custody, namely, the Vendor, Custodian, Auditor, which are further validated with proof of purchase and depository receipts provided and uploaded onto the InterPlanetary File System for permanent record.”
Why are stablecoins essential to my portfolio?
Stablecoins will lower the overall beta of your portfolio. This means that while the whole market might be crashing, the stablecoins in your portfolio will lower its overall risk and price change. Hedging your portfolio against market risks is extremely important in crypto, and everyone should do it.