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BullionsChain is described to be building a cryptocurrency to precious metals exchange where users can buy, sell, hedge or stake cryptocurrencies or precious metals. The BLC token built on the Ethereum blockchain idea has been designed and developed to reward token holders with BCG (BullionsChain Gold) and other physically backed digital representations of precious metals on a daily basis.
Once a cryptocurrency is created, a certain number of tokens are released from storage and into circulation. Cryptocurrencies or stablecoins can be used for payments, as well as remittances; they also hold value and can be traded. A capped amount of tokens will be created, so as demand for the tokens goes up, so does the price. The more people that use the currency, the higher the price usually is, and therefore owning a token has real world benefits.
A cryptocurrency backed by gold is a digital asset with additional properties that enable it to function as a medium of exchange, like a currency. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems. The decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.
Tokens or stablecoins are backed by gold that is held in allocated, segregated storage at a third party financial institution. Cryptocurrencies are entirely digital and are developed through a cryptographic process that ensures security and anonymity. There are several cryptocurrencies that are backed by gold in storage and others that aspire to achieve this.
When gold-backed cryptocurrencies or stablecoins are minted, physical gold is reserved and locked into the contract. Each token represents a certain amount of gold that is held in safekeeping for its owners. Since all tokens originate from a pool of gold, no more can ever be created. There will only ever be X tokens or Y ounces of gold in circulation, as governed by the predetermined parameters set upon issuance. The process for determining these parameters can be detailed, decentralized and based on the same blockchain that is used to represent the cryptocurrency that has its value tied to actual gold reserves.
The price of gold is an indivisible fraction of a troy ounce (1 ounce is 31.1035 grams). If you buy a token that has guaranteed backing, in the same way that the digital currency has a fixed amount of gold, you are limited to buying a fraction of an ounce per token. This allows investors to buy just as much or as little gold per token as they want.