Blockchain cryptocurrencies are in a bubble much like the dot-com boom of the late 1990s. The simplest of blockchain ideas are fetching sky-high valuations, with people all over the world falling over themselves to invest.

Despite its volume of participants, the crypto market is currently very unstable and dominated by rumor and speculation more than any other factor. This is because cryptocurrencies’ value is not tied to a real fiat or underlying physical assets. While this idea has directly contributed to market gains in recent months, it also has the power to cause the bubble to pop and collapse the industry.

Cryptocurrencies have nothing to back their value except investors’ faith, and faith is easily shaken. Take the example of China: the government announced that it was illegal to participate in initial coin offerings (ICOs), or to hold their tokens. The announcement led to a free-fall in prices.

What’s stopping this from happening elsewhere? Goldmint may have the answer. By offering a cryptocurrency that derives its value from physical gold, the company offers the market a revolutionary way to hedge against volatility. (See also: As New Crypto Options Launch, Investors Move Away From Stocks.)

How Does Goldmint Work?

The platform employs a multi-layered and complex system that ensures its processes work flawlessly. Handling gold requires enough security and verification to discourage other companies from attempting a similar feat, but the experienced team behind Goldmint has made it happen. The solution uses two proprietary blockchains, a custom-built robot terminal and a special API, that ultimately seek to create a new market for the precious metal.

The GOLD token has an underlying value based on a single physical supply of gold whether it be a gold bar or a piece of jewelry. The blockchain is a perfect solution for this endeavor as its robust verification capabilities ensure that there will be no question of the token’s real value. These tokens can be used for loans, escrow and other forms of guarantees.

GOLD tokens are created by turning in gold items to the company’s Custody Bot – a machine that will weigh and grade any gold object and then send the appropriate amount of GOLD tokens to the user’s wallet. The system can accomplish this unique feat by employing a built-in spectrometer, airtight security system for storage, and a custom Graphene blockchain. Customers will soon be able to find a Custody Bot at their local banks and pawn shops where they can begin turning their physical bullion into digital gold.

Why Gold?

In many ways, gold represents the perfect asset to work with blockchain. Individually, blockchain cryptocurrencies have valuations equivalent to whatever the market thinks they’re worth, and currently even a whisper could swing sentiment from positive to negative. Tying a physical asset to such a system would provide a base value that is hard to deny, but it has been tried before.

The cryptocurrency Tether (USDT) was one of the first to attempt such a valuation system. Each Tether is based on a single real US dollar, giving traders an easy and safe way to store dollars on an exchange without being exposed to price swings. However, recent suspicion that exchanges have been creating Tether from thin air to artificially prop up bitcoin caused a minor market correction. Goldmint’s thorough system for ensuring that each token is truly backed by gold can close this loophole and help stabilize the market.

In another step that distances Goldmint’s model from the way that most cryptocurrencies operate, GOLD tokens do not gain any value from proof of work. This is the concept that made bitcoin so successful – that the miners powering the network’s transactions should be rewarded for their efforts. While some might argue that there is no incentive for peers to support GOLD, they would be wrong.

A parallel ethereum blockchain will provide a 75% commission to miners that run the GOLD chain, but with a different token called MNT. This is the one addition to the ecosystem that will ensure a self-driven network, a token with undisputable real value, and a new way to invest. (See also: The Rewards and Risks of Silver and Gold.)

The Horizon is Gold

Led by the GOLD system, other physical assets may also find ways to transfer their value digitally. A contract that uses the blockchain instead of an institutional authority to prove its true value is a wonderful innovation. It has the potential to severely disrupt the status quo in places like the Chicago Board of Trade, where other tangible assets like wheat and livestock are traded in person. Goldmint is leading the way using one of the world’s oldest and most precious natural resources to reach this disruptive plateau.