Digix: The Gold Standard in Crypto-Assets

When researching Crypto-Asset Market Capitalization I was surprised to see DigixDAO listed as a part of the Ethereum universe. I was well aware of The DAO itself, having converted some of my Bitcoin into Ether, to purchase DAO tokens. As the title hints just a little bit, I think DigixDAO is a hasty rebrand of Digix, in an attempt to capitalize on the massive free PR available by associating with The DAO.

That’s an understandable move and since Digix is a serious player, I think it’s both well reasoned and wise. But just what exactly IS DigixDAO?

DigixDAO-process.png

The Digix Whitepaper has this to say about it:

Digix provides a use case for the tokenisation and documentation of physical assets through its Proof of Asset (PoA)protocol. The PoA protocol utilises Ethereum and the InterPlanetary Files System (IPFS) to track an asset through its chain of custody. This allows for the open and public verification of an asset’s existence without a centralised database. Digix also offers an API allowing other applications to be built on top of our asset tokenisation service.

You might see some spelling errors in that paragraph, but it’s a Singapore company, thusly using British English. Proof of Asset means precisely what it says – you have to prove you’ve got the thing, in this case a chain of events tying a Digix Gold Token to an actual physical gold bar. The cheekily named InterPlanetary File System is a ‘peer to peer hypermedia protocol’, and something that deserves a post all on its own. We can understand the use of IPFS and the Ethereum blockchain as an instance of data notarization.

The underlying company is, perhaps somewhat surprisingly, a Singapore pawn broker business called ValueMax. American readers should pause here; owning gold jewelry in some Asian countries fills a role similar to having a money market account here. ValueMax are publicly traded and they have twenty eight locations. This entity is more like a regional bank than the stereotypical American pawn shop in a seedy neighborhood with a bunch of used bikes chained together outside the front door.

ValueMax is selling the gold and associated tokens. The physical storage is entrusted to Malaca-Amit, near Singapore’s airport. An independent third party, Bureau Veritas Inspectorate, applies industry standard tests to the gold stocks to ensure their legitimacy.

 

DigixDAO is a curious entity in the eyes of someone used to American investments and our definition of a pawn shop. What I see here is a quarter century old Asian company in what is a respectable trade for their home country, they’ve grown to dozens of locations, they’re leveraging their existing skills and reputation to not just move into a new market, but instead they are first and get to define it from scratch.

DigixDAO is in a sweet spot, alone in a newly revealed niche with a tested solution. One possible path for them, given the flood of funds coming into anything with the letters ‘DAO’ associated with the name, would be acquiring pawn shop chains in other countries, so that they have local physical asset handling to go with their proven cryptocurrency system.

I’m going to check out the minimums to participate, but if I can get in for what I receive for a single ghost written cryptocurrency story, I’ll make the purchase so I can report the details of the transaction here.

 

 

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