A Beginner´s Guide to Buying, Selling, Using, and Mining DigixDAO:
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Ah, the gold standard debate. Nothing will show your economic ideology more than this topic. The gold standard is the idea that the paper currency used by a national government and circulating a society needs to be backed up by something tangible - namely gold. Without some backing, our money is just a piece of paper with no real value. It’s been a standard economic expectation for centuries.
Enter cryptocurrency. Cryptocurrencies fly in the face of the gold standard, because there is no physical object that a digital token represents. Instead its value is based completely on supply and demand for that coin and the consensus of value of all users. In other words, the community at large decides what the coin is worth by how much people are willing to buy and sell it for. Basically, the gold standard and cryptocurrency are on opposite ends of the spectrum. Or are they?
DigixDAO (DAO) is a cryptocurrency that is backed by a gold standard. It combines the new (cryptocurrency) with the old (gold standard). Each token represents an ounce of gold. The gold is stored in a vault and the amount and value of your gold is represented by the amount of DigixDAO tokens you possess. In other words, this is a coin that allows you to purchase gold and hold your asset in the form of a cryptocurrency. The gold lives in a custodial vault in Singapore and is safe and secure. By definition, it may seem that a cryptocurrency and gold standard are incompatible, but this is a way to make them both work in harmony.
Specifically, DigixDAO is a cryptocurrency that is based off the Ethereum blockchain. First, a cryptocurrency is a digital currency in the form of a token. They are based on blockchain technology, which is a decentralized way for a community at large to help with the auditing and processing of the coin and its transactions. The web is full of helpful websites like Reddit to define DigixDAO further.
DigixDAO is a pretty easy coin to buy, if you follow these steps. First, you’ll need an Ether wallet because DigixDAO is based on the Ethereum blockchain. Myetherwallet is a good choice because it can store all the coins represented on the Ethereum blockchain, including DigixDAO. Once you’ve downloaded the wallet, you’ll need to create an account through the wallet platform with a username and password. Next you’ll need to purchase Ethereum so you can transfer it to DigixDAO. This can be done on either Coinbase or Cex.io. Ethereum can be purchased with cash or credit card.
Now that you’ve purchased Ethereum, it needs to be exchanged into DigixDAO through a website like Changelly. Choose the amount of DigixDAO you’d like to purchase. To finalize the purchase you’ll need to enter your private wallet address from Myetherwallet and Coinbase.
Ready to turn your DigixDAO into cash? It essentially follows the above steps, only in reverse, plus one additional step. Use Changelly to convert your DigixDAO tokens back into Ethereum. Depending on your exchange site, you may need to transfer your Ethereum into Bitcoin before being able to fully cashout. Now that you’ve been able to sell your DigixDAO, Ethereum and Bitcoin and convert it to USD or any other fiat currency, it’s yours to withdraw from an ATM.
Because DigixDAO is such a unique coin, there are a couple of different ways to use it once you have some stored in your wallet. Both of these ways are centered around investing. DigixDAO is designed to be a way to combine your gold bullion investment with your cryptocurrency investment. What this allows you to do is buy into two separate forms of investments at the same time. Thus, depending on the exchange rates, price and value of the gold, you could transfer your DigixDAO into a fiat currency or another cryptocurrency to make a profit. As the number of altcoins in existence grows, the number of ways to use these coins also grows. It can even be used in online games like DigixDAO poker.
DigixDAO cannot be mined in the truest sense, since the mining process in itself creates new coins, and DigixDAO is based on tokens back by gold. However, those interested in mining can choose to mine Ethereum through the Proof of Work algorithm. Mining is the process of working on the Ethereum blockchain, helping process the transactions and audit the coin.
The blockchain acts as the ledger or account book and stores all the transactions that are with the coin. Miners use calculators powered by specialized computers to mine coins. However, since DigixDAO cannot be mined in the truest sense of the word, miners must seek out and mine for Ethereum. After the Ethereum is mined, it can be exchanged for DigixDAO coins by following the process above.
The more a coin grows in popularity, the more transactions are made with it. In order for the blockchain to be able to handle all of these transactions, it has to scale well. Scaling is the ability a coin has to handle its growth. Every coin must face the issue of scaling. In this regard, DigixDAO is unique. Because DigixDAO is based on the Ethereum blockchain, its ability to scale is based partly on Ethereum’s ability to scale.
DigixDAO is one of the more unique coins out there because of the way it combines two economical philosophies and combines them into one. Cryptocurrencies were born out of the idea that a currency doesn’t need a gold standard controlled by a central agency. But instead the free market decides the value of the coin. It appears however, that DigixDAO has found a small way to bridge these two ideologies together.