DigitalTangible has announced the formal launch of its crypto 2.0-powered, decentralized marketplace for gold and bitcoin traders.
While existing services allow bitcoin users to buy gold with bitcoin, DigitalTangible offers a novel innovation for the market, using an underlying crypto 2.0 protocol that issues tokens representing physical gold and attaches them to bitcoin addresses, thereby allowing traders to seamlessly move between bitcoin and gold.
Speaking to CoinDesk, DigitalTangible founder Taariq Lewis framed his service as one that will better cater to the needs of bitcoin’s existing gold enthusiasts, while attracting members of the wider precious-metals community who may have yet to participate in digital currency markets.
Lewis told CoinDesk:
“If you look at our homepage, you’re looking at the price of bitcoin and the price of gold. If gold is going down and you own gold, and bitcoin is going up and you want to own bitcoin, you want to be able to move out of gold into bitcoin quickly and we’re going to be the only platform for you to do that.”
While existing gold-buying services do cater to the community, Lewis painted these solutions as ill-equipped to handle the needs of his target investors.
A veteran of the crypto 2.0 community, Lewis previously worked for Mastercoin prior to starting DigitalTangible earlier this year. The formal unveiling follows DigitalTangible’s soft launch on 23rd July.
DigitalTangible’s gold tokens are currently being issued on the Counterparty and NXT protocols, though it supports a number of different alternatives.
Gold dealer support
DigitalTangible counts two of the more visible gold-buying services that cater to bitcoin users as partners – Amagi Metals, which recently announced it would cease to accept fiat currency by 2017, and Agora Commodities, which has sold more than $10m-worth of gold and silver for bitcoin to date.
The launch coincides with the formal unveiling of the firm’s partnership with Amagi, and to mark the occasion, the companies are offering all customers free overnight shipping on select gold products for a limited time.
Lewis explained that both Agora and Amagi will sell gold on the DigitalTangible platform, competing for customers and thereby driving down costs for users. As the project’s lead vendors, Lewis added that the partnership is attractive for Agora and Amagi as they can increase sales and drive down marketing costs.
Agora Commodities president and CEO Joseph Castillo framed DigitalTangible as a way to bring gold trading into the 21st century, telling CoinDesk:
“Traders don’t want to wait for gold to have to get to someplace or anything like that. The thing that [DigitalTangible] can do is it’s a platform where gold and bitcoin can go between each other, instantly, and that’s where I see the value in what they’re doing.”
Castillo praised the project while also framing the partnership with DigitalTangible as another way his company is catering to gold buyers, many of whom, he indicated, still want to hold physical gold.
He added: “I like what they’re doing, I would like to have it for my own.”
Proof of custody
DigitalTangible is built on three layers of technology, with the topmost part being its e-commerce-inspired gold and bitcoin marketplace.
The platform is then supported by its crypto 2.0 protocol, which allows for trading between gold and bitcoin, and its custodian network that provides the gold listed on the platform and stores the holdings.
Agora and Amagi ship the gold they sell to a depository service, where the third-party will verify that the shipment has been made for customers.
To encourage trading, DigitalTangible’s website features a ‘proof of custody‘ section that aims to ease the potential anxieties of prospective buyers. The page shows a list of the platform’s top asset holders, along with detailed listings of their precious metals holdings and their estimated value in bitcoin.
Lewis explained that his company does not act as a custodian of any of the assets that users purchase on the marketplace. He noted that all gold is stored in third-party depositories and that customers retain the private keys for any bitcoins purchased on the platform.
DigitalTangible uses three services to store its gold on behalf of its customers, and added that the platform offers custody in Asia, Europe and the US.
Attracting gold buyers
Still, Lewis acknowledged that security alone is not enough to entice the market of buyers DigitalTangible is looking to attract, suggesting that his platform will also seek to provide a cost savings to traders.
Lewis said that while low premiums are a luxury usually only afforded to large gold buyers, his platform will remove this restrictive cost while retaining high-quality offerings:
“We’re selling the highest-quality gold at essentially zero premium, since we are now bringing Amagi and Agora to a platform where they can try to get customers onboard with us. So, the premiums for gold on our site are the lowest you’ll find.”
Of course, while bitcoin enjoys some support from the gold community, not all gold investors are enthusiastic about alternative digital stores of value. As such, DigitalTangible and its partners are investing in a marketing push that aims to fight against any negative perceptions of bitcoin.
Lewis suggested that DigitalTangible will target the gold market through traditional digital marketing strategies, while its partners, Agora and Amagi advertise their services through popular bitcoin websites.
He added that the company is also “trying to reach out to people who are managing their own retirement accounts, doing their own retirement planning”.
Given that DigitalTangible is a decentralized marketplace, Lewis also addressed the possibility that his service would expand beyond gold. However, he suggested that, as of now, his team wants to specialize in gold in order to provide the best user experience.
Lewis cited the sheer size of the gold market as a reason that this specialization is a long-term businesses advantage, noting that it’s a more than $5tn annual market.
Still, he says he has been approached by a number of altcoin developers that want to add their offerings to the service, as such, Lewis indicated the opportunities for expansion are being considered, concluding:
“If we can do gold really well, then any asset is open to us. Don’t be surprised if you see cocoa beans here. We’ve seen a lot of scams, people pre-announce stuff that’s not ready, so we’ve been really trying to navigate that properly to launch an amazing product to do something that was previously costly and impossible.”
Gold scale image via Shutterstock