What is DigixDAO and how can you buy its DGD tokens in Australia?
The Digix Decentralized Autonomous Organisation, better known as DigixDAO, aims to decentralize the physical commodity industry by allowing consumers to tokenize gold and other physical assets on the Ethereum blockchain.
Holders of DGD tokens, which were issued in a March 2016 crowdsale, have the power to vote on proposals submitted to DigixDAO. In return for participating in the governance of DigixDAO, those token holders are then rewarded with Digix Gold (DGX), a separate token that represents 1 gram of gold.
A top-50 cryptocurrency by market cap, DigixDAO is available on a number of cryptocurrency exchanges. Read on for an in-depth guide to buying and selling DGD tokens.
Where to buy DigixDAO (DGD)
You can buy DGD tokens on a number of popular crypto exchanges, including:
A step-by-step guide to buying DigixDAO
If you want to buy DGD tokens, here are the three basic steps to follow:
Step 1. Create an account with a cryptocurrency exchange that lists DGD
The first thing you need to do is search for and compare exchanges that list DGD in one or more currency pairings. Once you’ve found a suitable platform, enter your email address and create a password to sign up for an account.
Depending on the platform you choose, you may need to supply additional personal information and proof of ID to satisfy know your customer (KYC) requirements before you can start trading. We also recommend enabling two-factor authentication on your account for increased security.
Step 2. Deposit funds into your account
Before you can buy DGD tokens, you’ll need to fund your account. Many exchanges only provide crypto-to-crypto trading, so if you’re using one of these platforms you’ll first need to obtain a cryptocurrency listed in a pairing with DGD, for example Bitcoin (BTC) or Ether (ETH). Once you have the necessary coins or tokens, look for the “Deposit” link from your account dashboard and copy the relevant address for your exchange wallet.
Step 3. Buy DGD
Once your deposit has cleared, navigate to the exchange or markets section of your chosen platform and search for your desired currency pair, for example DGD/BTC. You can then enter the amount of DGD you want to purchase, check the price and click on “Buy DGD”.
Remember to review the full details of your transaction, including any fees that apply, before proceeding with the purchase.
How to sell DigixDAO
If you’d like to sell your DGD tokens, you’ll need to follow a fairly similar process to that detailed in step 3. Just make sure that you look for the “Sell DGD” link and specify the amount of tokens you want to sell. Remember too that DGD is only listed in a limited range of currency pairs, so you mightn’t be able to exchange your tokens for the currency you want straight away.
Which wallets can I use to hold DigixDAO?
As ERC20 tokens on the Ethereum blockchain, DGD tokens can be stored in any ERC20-compatible wallet. For example, you may wish to manage your coins through a web wallet like MyEtherWallet, a mobile and desktop wallet such as Jaxx, or perhaps the Ledger Nano S or TREZOR hardware wallets.
How DigixDAO works
The Digix Decentralized Autonomous Organisation is a self-governing community that can trace its roots back to a March 2016 crowdsale. A community based on the Ethereum blockchain, DigixDAO aims to involve its token holders in the decision-making process and in shaping the direction of the asset tokenization business. Its on-chain crowdsale reached its US$5.5 million target in the space of 12 hours.
What the project aims to achieve is outlined in the abstract from its whitepaper:
“Digix provides a use case for the tokenization and documentation of physical assets through its Proof of Asset (PoA) protocol. The PoA protocol utilizes Ethereum and the InterPlanetary Files System (IPFS) to track an asset through its chain of custody. This allows for the open and public verification of an asset’s existence without a centralized database. Digix also offers an API allowing other applications to be built on top of our asset tokenization service.”
That’s the theory behind the project, and in practice DigixDAO has two tokens:
- Digix Gold tokens (DGX). Each DGX token represents 1g of gold and is divisible to 0.001g. It’s designed to act as a store of value that can be retained over time with minimal volatility and is backed by reserves of gold. These tokens were released for sale in April 2018.
- DigixDAO tokens (DGD). Created during the 2016 crowdsale, DGD tokens represent voting rights in the DigixDAO system. Holders receive quarterly rewards based on the amount of DGX transaction fees collected.
Things to consider before buying DigixDAO
It’s important to remember that all cryptocurrencies are volatile and carry a high level of risk. With this in mind, make sure you do your own research prior to making a purchase.
If you’re thinking of buying DGD tokens, consider the following factors first:
- Supply. According to CoinMarketCap, at time of writing (April 2018) the circulating supply of DGD is 2 million tokens. However, if DigixDAO requires more funding and this is approved by the community, another token crowdsale will be held.
- Use. DGD tokens represent the right to participate in the governance of the DigixDAO community, giving you the power to vote on submitted proposals. Voting then allows DGD holders to claim rewards, as explained in a blog post from February 2018: “It is only upon successful voting that there are Digix rewards which can include DGX discounts or rebates, amongst the other possible rewards in the Digix rewards shop.”
- Voting not yet available. At time of writing (April 2018) the Digix governance system was still being planned, developed and audited. It remains to be seen exactly how the structure will work and what sort of rewards DGD holders will be able to access.
- Project aim. The rationale behind the DigixDAO project is to make it easier, more affordable and convenient to own and liquidate gold assets, and at the same time provide a level of stability not usually associated with cryptocurrencies.
- The importance of stablecoins. Coins that offer stability and reliability are widely seen as an important part of the growing crypto ecosystem. However, whether or not DigixDAO can achieve widespread adoption of DGX tokens remains to be seen, as there are several other projects also working to launch their own stablecoins.
- Partnerships. It’s always a good idea to investigate the partnerships a crypto team has established to form a clearer picture of what the future may hold for the coin. For example, DigixDAO has partnered with Pundi X to take its Digix Gold Tokens to Indonesia, and also revealed in January 2018 that DGX tokens would be used to back the Dai stablecoin as collateral.
- Whitepaper. If you want to know more about the technology behind DigixDAO and how it tokenises physical assets, check out the project’s whitepaper.
By doing your own research and considering a wide range of factors, you’ll be better placed to decide whether or not you should buy any DGD tokens.
Disclosure: At time of writing the author holds IOTA and XLM.