A new start up company is hoping to take a slice of the growing market for digital currencies established by Bitcoin, by launching a new 'alt coin' which is backed by Gold. NoFiatCoin launched on the 6th January 2014, and has already seen its value rise by more than 50%. Current prices and other information can be found on their website: http://nofiatcoin.com
The idea behind NoFiatCoin is to provide a new digital currency, with all the advantages of something like Bitcoin, but backed by something with real world value - gold and silver. Unlike Bitcoin and the vast majority of other 'alt coins' which have recently been trying to muscle in on this lucrative new market, the NoFiatCoin does not use 'mining' for its initial distribution. Usually these coins are handed out for free to people who 'mine' then by performing complex calculations on high performance computers. This has caused a massively uneven distribution of the coins, with 0.1% of Bitcoin owners holding half of the coins.
By selling their initial distribution of NoFiatCoins and using the money to stock their vaults with gold and silver NoFiatCoin aims to provide a more even distribution, but crucially this is also how they provide the innovative precious metals backing for their coin - they use the money from people buying the coin to stock their vaults with precious metals. Owners of XNF, which is the currency code used to denote the NoFiatCoin, can 'redeem' their coins at any time, and request the corresponding value of gold or silver to be sent out to them (fees do apply for delivery). The company behind the coin currently have several vaults in the US and Europe, with promises of more opening soon.
It seems likely that with a name like 'No Fiat' coin the main demographic which this new digital currency is going to appeal to is the kind of 'gold bug' investor who has always lamented the end of the gold standard and the inflationary effects of 'fiat currency' issued by central banks. It could also find a home amongst the more ideologically driven Bitcoin fans who don't like the big banks and are interested in the potential of digital money to provide an alternative, decentralized and peer to peer financial industry.
What interests me is whether it could also prove to be a safer alternative to Bitcoin, with its value underpinned by something real rather than based purely software and public perception. Take a look at their site and tell me what you think: http://nofiatcoin.com