NYC Landlord Kent Swig Starts New Cryptocurrency With $6B in Gold
Who knew a conversation between Kent Swig and his teenage son would lead to the development of a new cryptocurrency?
Swig, a New York City landlord, secured a minimum of $6 billion in gold reserves to back DIGau, his new cryptocurrency, Bloomberg reported.
The value of a DIGau digital token will be attached to the market price of gold, which would in theory make it more stable than other oft-fluctuating digital currencies like bitcoin. Swig and partner Stephen Braverman’s company, Dignity Gold, plan to guarantee the new cryptocurrency with liens secured against mining claims in Nevada and Arizona.
The owner of realty firm Brown Harris Stevens and Swig Equities first became interested in the concept of cryptocurrencies after hearing about it from his teenage son, and gold seemed like a tried-and-true option to back his digital dollars.
A gold-backed cryptocurrency, like the gold standard the U.S. abandoned in 1973, would ideally offer stability, as the limited quantity of gold would then limit currency inflation or deflation.
In contrast, the value of a bitcoin, a currency tied to neither gold nor government, rose 4.51 percent in the last 24 hours and over 55 percent since mid-January, according to CoinDesk. The price of gold has risen 14 percent since January 2020, according to Bloomberg.
But other gold-backed digital currencies have gained little traction, even as investors seek a hedge against inflation. Cryptocurrencies with values tied to other external references, called “stablecoins,” have not always been successful either.
Tether, a stablecoin supposedly linked to the U.S. dollar, agreed to pay $18.5 million to settle allegations that it, and the cryptocurrency firm Bitfinex, moved millions of dollars to cover losses of commingled client and corporate funds, CNBC reported.
For Swig, securing the gold was crucial, as Dignity Gold must hold it to assure investors there’s a backstop against the price of the cryptocurrency falling below the fiat currency. The project took him 18 months of worldwide hunting for gold assets, seeking out gold mines in the U.S. to add credibility and transparency to the cryptocurrency. DIGau will also pay a dividend to token-holders — a unique feature of the digital currency.
Swig’s plan for a new cryptocurrency comes after increased interest in another kind of blockchain-based digital token: non-fungible tokens (NFTs). Commonly used for digital art, NFTs allow a person to own the “original” copy of a digital artwork, song, or even a meme, according to The Verge. A New York Times journalist even sold his column, which anyone can read for free, for hundreds of thousands of dollars.
Blockchain technology could even provide the basis for a trading system for carbon emissions by New York City buildings, Commercial Observer reported. Swig, it seems, is not alone in this rush toward digital commodities.