Constant economic crises force investors to seek reliable ways to preserve their capital. During such periods, gold and shares of major companies are often the top choices. In this review, we'll explain how to safely purchase US stocks and digital gold through a cryptocurrency exchange.
Content:
- Gold as an investment
- Tokenized shares and digital assets
- The Future of Digital Investments
- Bottom Line: Are Digital Stocks and Gold Worth Investing in?
Gold as an Investment
When the global economy experiences turmoil, many assets quickly lose value. Gold, on the other hand, appreciates and maintains its appeal. This is why it's called a "safe haven"—an instrument that helps reduce risk and protect investors' capital.
Why Buy Gold and What is the Best Form to Do It?
Gold has long been a means of protecting capital, especially in times of economic instability, rising inflation, and stock market corrections. Today, investors have several ways to invest in this metal:
- Physical gold – bars or coins that will have to be stored and insured somewhere;
- Gold ETFs are a simpler and more liquid option; they are easy to buy and sell;
- Digital gold is a blockchain-based token that verifies your ownership of the metal.
Each option has its pros and cons: physical gold requires additional costs, ETFs are extremely convenient for trading, and digital gold is easy to use but dependent on technology and the associated risks.
XAUt – Digital Gold or a Scam?
One of the most well-known gold tokens is Tether Gold (XAUt). Each token represents one troy ounce of physical gold, stored in a Swiss bank. For investors, this is a convenient way to own gold without worrying about safe deposit boxes and insurance. However, there's a catch: it all depends on trust in the issuer. If the company issuing the token loses its reputation or proves unreliable, the asset's value can plummet very quickly.
The Best Way to Buy Gold
Each method of purchasing gold has its own strengths and weaknesses. The choice depends on the investor's goals, investment amount, and risk tolerance.
|
How to buy gold |
✔️ Benefits |
❌ Disadvantages |
|
Physical gold (bars, coins) |
Direct ownership, inflation protection, no counterparty risk |
Storage issues, low liquidity, wide bid/ask spreads |
|
Opening an unallocated metal account (OMC) |
Convenience, liquidity, accessibility |
Counterparty risk, no physical ownership, wide spreads |
|
Buying through an ETF |
High liquidity, low costs, accessibility |
No direct ownership, counterparty risk, hidden fees |
|
Buying on crypto exchanges (tokenized gold) |
High liquidity, decentralization, 24/7 availability |
High volatility, risks of exchange or wallet hacking, insufficient regulation |
The format for investing in gold largely depends on what you expect from this investment and how prepared you are for additional expenses.
If you need a simple "safety net" in case of a crisis, you can buy physical gold—bars or coins. This is the most reliable option, but only if you have the means to store it.
When viewing gold more as an investment, ETFs are more convenient. They're liquid, easy to buy and sell, and eliminate the need to worry about safe deposit boxes or insurance.
There's also an intermediate option: unallocated metal accounts (UMAs). Here, you record the value of the gold, but don't actually own the metal. This option is suitable for those who trust the bank and don't want to spend money on safe deposit box rental.
If you're already familiar with cryptocurrencies and comfortable with technological risks, you might consider tokenized gold. For example, Tether Gold (XAUt) combines the value of traditional metal with the convenience of digital assets.
Tokenized Shares and Digital Assets
Asset tokenization is one of the most recent and exciting ideas at the intersection of finance and blockchain. Essentially, it's the transfer of ownership of real assets into digital form. As a result, tokens are created on the network that confirm your share or right to a specific asset. Virtually everything can be digitized: from works of art and gold to real estate, stocks, and bonds.
What are Tokenized Shares and How Can you Make Money with Them?
Tokenized shares are digital copies of regular securities issued on the blockchain. One token is equivalent to one share of a real company. This format makes it possible to buy shares of even expensive companies like Tesla with just a few dollars. Essentially, it's a simplified way to gain exposure to global corporations through a crypto exchange without opening a brokerage account. Profits come from the token's price appreciation and sometimes dividends, if the issuer pays them.
But there are important nuances. Owners of tokenized shares do not receive voting rights at shareholder meetings. Furthermore, regulations are still unclear across countries, which can lead to restrictions or even blocking. Another consideration is investor protection. In the traditional model, shares are purchased through a licensed broker, but here everything depends on the stability of the crypto exchange. If the platform proves unreliable, suffers a hack, or shuts down, recovering your investment will be nearly impossible.
Who Issues Tokenized Shares?
Tokenized shares (xStocks) are issued by the Swiss company Backed Asset Limited in partnership with several crypto exchanges. At the time of writing, they were available on Kraken, ByBit, Gate, and Bitget. The scheme works like this: real shares are held by custodian organizations, which act as collateral holders. Tokens are issued on the Solana network against these securities, and these tokens are then traded on the market.
In addition to tokenized company shares, there are also funds in circulation, such as SPYx (SP500 xStock).
How Does Digital Asset Tokenization Work?
Let's take a look at how Backed issues tokenized shares. The process is quite simple:
- Shares of American companies are purchased at Interactive Brokers;
- The shares are transferred to the European depository Clearstream;
- Tokens are issued in a 1:1 ratio (1 share = 1 token);
- Tokens are listed on crypto exchanges Kraken, ByBit, Gate, and Bitget.
Please note: Due to the 24/7 nature of the cryptocurrency market, tokenized stock charts may show very narrow price fluctuations during periods when stock markets are closed.
Risks of Tokenized Shares
Tokenized shares, despite all their advantages, also have significant risks:
- Legal uncertainty – not all countries recognize such assets as full-fledged securities;
- Dependence on the issuer - if the company issuing the tokens goes bankrupt, the collateral behind them will disappear;
- Low liquidity compared to classic shares;
- Technological risks associated with the operation of the blockchain and the exchange itself.
A good example is the story of Binance Stock Token. Binance launched the project in April 2021, but by October it had shut it down under pressure from regulators in Germany and the UK. Local regulators BaFin and the FCA accused the exchange of trading securities without a license and violating regulations. Ultimately, Binance's management decided the risks were too high and shifted its focus to its core business – cryptocurrency trading.
Top Tokenized Stocks by Market Cap
Although tokenized shares have been around for several years, they still haven't reached the level of traditional stock markets. The main obstacles are strong regulatory pressure and the lack of a unified settlement system.
Nevertheless, noticeable trends are emerging in the market. According to the aggregator Coinmarketcap, projects where tokens are backed by stakes in funds or shares of well-known companies are generating the most interest. Among the leaders are the SP500 ETF, Tesla, Circle, Nasdaq ETF, MicroStrategy, and Apple.
How to Buy Tokenized Shares
Let's take the example of purchasing tokenized stocks on the ByBit exchange. After logging in, open the "Markets" tab, then select the "Spot" section and go to the "xStocks" category. From the list of available tokenized stocks, select the desired instrument and click "Trade." This will open a terminal where you can buy or sell the selected asset.
The Future of Digital Investments
The future of digital investments is largely shaped by several key trends. These include, first and foremost, the active development of blockchain, the implementation of artificial intelligence, process automation, and the emergence of new asset ownership models.
Digital Funds – Assets of the Future
The modern financial market is rapidly moving toward digitalization. Tokenized funds for stocks, bonds, and commodities already allow you to build investment portfolios with just a few clicks. This approach makes investing convenient, transparent, and accessible to virtually everyone.
RWA is a New Trend in the Crypto Market
Anyone who follows cryptocurrencies knows that asset tokenization is one of the main market trends. Therefore, it makes sense to pay attention to companies actively working in this space to acquire promising tokens early. Digitized gold and silver are already being developed. For example, Tether, the creators of USDT, has its own gold, and each token is backed by real bullion. At the same time, two trends are evident in the market: on the one hand, the rapid growth of asset tokenization, and on the other, a long list of tokenized security projects that have failed to live up to expectations.
Prospects for Tokenized Assets
The future of tokenized assets depends largely on the position of the SEC (the US Securities and Exchange Commission). Several scenarios are possible.
In the best-case scenario, the SEC will adopt clear rules for the issuance and trading of tokenized shares. This will create a transparent and secure environment for investors and provide a powerful impetus for market growth.
In a neutral scenario, regulation will be limited or inconsistent. This will slow the development of tokenization, but not stop it completely.
In the worst case, strict restrictions or bans on tokenized securities may be introduced. This will cause some projects to leave the market, and the risks for investors will increase significantly.
|
Optimistic |
Neutral |
Negative |
|
Regulators embrace tokenization of the economy |
Regulators are tightening checks |
Regulators accuse exchanges of illegal trading of central banks |
|
xStock becomes the standard |
xStock remains a niche product |
Cryptocurrency exchanges are dividing tokens |
|
Backend Issuer Receives Additional Licenses |
Blocked in some countries |
Backend is leaving the market or changing its product |
Bottom Line: Are Digital Stocks and Gold Worth Investing in?
The appearance of a new product on a crypto exchange doesn't mean it's worth buying right away. The example of Binance's token, which was first launched and then shut down, clearly demonstrates that many tokenized stocks can disappear from the market. Therefore, at the time of writing, assets such as tokenized stocks and gold remain high-risk. This is important to consider, especially if you're planning long-term investments.
Please share in the comments if you have any experience with tokenized assets and what results you've achieved.
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