The first legally compliant digital currency based on a physical asset, OilCoin, was announced last month. Each token will reportedly represent the value of one barrel of oil.
A team of banking and technology managers, and US regulatory commissioners who launched the digital currency claim it would provide users with a safe haven from cryptocurrency volatility.
RT talked to Alexandre Kateb, president of Competence Finance SAS, to understand if the new digital currency could one day become a real safe haven like gold.
“OilCoin will try to replicate the movement of oil prices, very much like a financial instrument called an oil future,” said Kateb, who explained that this contrasted with bitcoin and other cryptocurrencies, the value of which is determined by supply and demand for the tokens in circulation, and the cost of issuing new tokens.
He added that OilCoin would have to be backed by physical oil inventories, unlike oil futures, which have to be rolled over periodically and is purely a financial instrument.
Kateb said that “very much like a traditional currency, it is possible to back a cryptocurrency by a physical asset” but expressed doubts that OilCoin could become a real safe haven.
Link:
https://www.rt.com/business
