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DigitalTangible's purchasing flowchart.

DigitalTangible’s purchasing flowchart.

There’s a well-established overlap between the bitcoin marketplace and the market for physical gold. Both communities have a well-founded skepticism of central banks and fiat currency, for instance. With that in mind, it’s hardly surprising that bullion dealers were among the first generation of merchants to realize the potential of bitcoin as a medium of exchange and store of value. Now, two of the most bitcoin-friendly gold bullion dealers on the internet — Amagi Metals and Agora Commodities — have joined forces with San Francisco-based cryptocurrency software developer Taariq Lewis to launch DigitalTangible, a hybrid bitcoin-gold marketplace.

The DigitalTangible system seeks to tie each unit of gold in their custody to bitcoin’s block chain, creating a “decentralized asset catalog” of the movement and trading of individual pieces of gold. This “Proof of Custody” system seeks to provide instant, verifiable details about every fragment of bullion in the system, allowing stored gold to be traded almost as easily as bitcoin. As DigitalTangible’s site explains:

When you purchase any gold from our partner retailers and put this gold into custody at any of our custodian partners, you will receive digital gold tokens from DigitalTangible. These digital gold tokens are secured by the Bitcoin Blockchain ledger. … You may trade your gold in these markets to either provide gold assets for active traders or to capture liquidity from other traders seeking to sell their Bitcoins for gold.

In principle, an attentive user could hedge on the relative weaknesses of the gold or bitcoin values at any time. Customers will still need to store their gold with a centralized, third-party service in order to trade it. DigitalTangible’s system allows users to take possession of their gold at any time, although no fee schedule for delivery of the gold has been published.

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