Gold was used as a currency in the past and we all know that it is not used as currency now but what if I tell you we can still use gold to pay.for our purchases and day to day activities? We have emphasised on the history and value of gold in our older post which you can check from here. Today in this article we will be talking specifically about the digital gold, what is it, is it safe or how can we use it, every question is covered below.
Some big names which you must have heard of or you you might have those applications in your smartphone as well, I am talking about Paytm is one of the trusted companies which offers opportunities to people for buying or investing in gold digitally. You can simply buy or sell gold online on platforms like Paytm, etc. In the lockdown period we have seen rise in digital awareness and rise in people buying digital gold. Today where we are in terms of digitalisation is only because of the digital revolution or internet revolution which came because of JIO entering the market and other factor is Digital India and similar campaigns launched by the Government of India.Whether it be welfare, G2C services, railways or any department, Government made sure to make things digital for their employees as well, one example of it would be the Indian Railways where there are separate portal for users which is ” irctc.co.in ” and other is for employees which is ” aims.indianrailways.gov.in “. Similarly govt digitalised other departments as well.
Before getting in to the details of digital gold we will talk about some basics or old methods which we have been using in the past and majority of people are still using it.
Types of gold investments
In India gold has always been looked as a safe and good investment option and the ways or types of investment made in gold are buying coins, jewellery or if someone has good money to invest in then gold bars.
Digital gold is still new concept in the Indian market because of several reasons but now after the pandemic when everything went online then people got more aware about digital gold so this post is the need of the hour.
What Exactly Digital Gold is?
THere’s no rocket science in digital gold, it is just as simple as it can get. Just break down the name digital and gold, the difference is similar hard cash and digital money. There are multiple benefits of acquiring digital gold now a days which are discussed below. Although the traditional way of acquiring gold in hard physical form gives the sense of security and other emotional factors are also attached to it but there are downsides as well which includes checking of quality, safely storing it, etc. Physical gold is liquid there’s no doubt in that but digital gold has just became like cash only because of some startups which let you invest in digital gold and have a type of debit card and use it where ever you make a purchase, the quantity of gold which will be deducted will be similar to the amount you spent.
You don’t have to worry about safely storing it or the quality of gold because it is a digital trade. Buyers can track, mange, buy, sell or do whatever they want with their smartphone and an internet connection only.
Is it backed by the Government or safe to invest in Digital gold?
As mentioned above there are some trusted companies like Paytm, Google pay, phonepe etc. offering the service and even banks like HDFC and companies like Motilal Oswal also offers digital gold investing option but is it backed by the Govt. or is it really safe?
There are few things which you must be aware of before spending your money on it. These are just the platforms and not the real gold sellers, companies which are actually selling digital gold in India are MMTC PAMP, Safegold, etc. What exactly happens is when we purchase digital gold from these platforms, the real sellers companies behind the platforms purchases equivalent quantity and amount of physical gold and store it under your name in secured vaults.
Pros and Cons of Digital Gold
There are multiple advantages of Digital gold but there are some cons as well which we have mentioned below and users can go through. both an decide whether it is a good option for them or not.
- No hassle of safely storing it, quality or purity and whenever the buyer want he/she can get it in the physical form by a few clicks on their smartphone.
- There is no minimum amount or quantity, even if you have 10 rupees, you can invest or buy gold for 10 rupees which can not be done in the traditional way.
- Companies use it as a collateral for providing loans online.
Disadvantages of Investing in Digital Gold:
- Most of the platforms have a limit of investing in gold which is rarely low because of the current guidelines, in numbers it is as low as 2 lakh rupees.
- Big government bodies like RBI or SEBI does not govern these platforms so there is a sense of less security.
- There are different policies and terms which vary from platform to platform on which you need to be fully aware of before spending your money on it.
Should you be investing in Digital gold?
The platforms offering the digital gold services are trusted and there are many pros or advantages of digital gold as mentioned above. We have covered almost all the basic aspects of digital gold above. Now if you should be investing in it or not depends on various factors which needs a separate topic for discussion but even if you are someone who likes traditional ways only, we would still recommend giving it a try with small amount because it possibly can be the future and early bidders always get an edge.