Digix started in 2014 with the idea of tokenizing gold on the blockchain. Anthony Eufemio, Co-Founder and CTO of Digix shares how the company created a way to tokenize gold and tells why gold would be the perfect asset class for their protocol. Anthony further adds how they are doing their best to make this global by building an ecosystem and partnering with a lot of point of sale companies that are creating crypto-based systems that retailers can have and accept DGX tokens. Anthony dives deeper and tells more how this platform is beneficial to us.
Watch the Episode Here:
Listen to the Podcast Here:
Digitized Gold with Anthony Eufemio, Co-Founder Of Digix
I’m here with Digix Cofounder, Anthony Eufemio. Anthony, thank you so much for joining us.
Monika, thanks for having me here.
You have a very distributed team, is that right?
It’s not very distributed. Singapore is our headquarters. We also have developers in the Philippines. I am based out of Seattle, Washington.
Can you tell me a little bit more about Digix? When were you founded? What made you guys want to found it? Do you have any founding genesis story of the company?
I co-founded this company with Kai C. Chng, who’s the CEO. He’s also my brother-in-law. I’ve known him a few years prior to starting the company. We co-founded it with Shaun Djie, who is our COO and manages all of the events as well. We started this company in 2014 with the idea of tokenizing gold on the blockchain. Kai was a currencies trader prior to starting Digix. I was working in Fintech on Wall Street. I was on IT and software development. We were thinking of a way of how we can tokenize gold but having it so that people can trust the tokenized gold, that it is 100% backed by gold on the vaults. We came up with this protocol called the Proof of Provenance, which is a set of business rules that implement a supply chain system on the Ethereum blockchain.
It allows us to have different types of participant classes. In our case, it would be the vendor of the physical gold bar, whoever is selling the original source of the physical gold bar, the custodian, which would be storing the bars in their physical volts. We have auditors who would audit. The idea of having these three different participants is that in order for you to gain the system, in order for somebody to create tokens out of nothing, they would have to have three different participants collude together. It’s a collusion situation, which would be impossible if they’re all trying to make sure that your service is trusted.
You take the existing trust of a pre-blockchain ecosystem, and you leverage that into a blockchain protocol that requires them to work against their own immediate personal needs or desires to be able to break the blockchain.
If you look at the other asset-backed tokens on this space, like USD Tether, and you have other asset classes, the stable points. We don’t know exactly if they’re backed by US dollars. There’s been news already where Tether turned out to be only backed 75% or something along that. They ended up becoming a fractional token. In our case, it can never be fractional. Every one DGX would always be backed by one gram of physical gold. You can always verify that. You can see the documents. In the process of tokenizing physical gold, there are documents and pictures of the gold bar with serial numbers and certificates associated with them that are uploaded on the blockchain itself and can be checked by anybody running an Ethereum and IPFS client. They can check that it is on there. It’s inside. These events took place at specific times. They happen in a specific order, which signifies that the asset was purchased, was sent to the vault and has been audited.
You have more than one coin in your ecosystem. You have what is stable and clearly backed. You have a lot of documentation behind that. You also have a utility coin. What is all this whole cornucopia? How does it work together?
We have a utility token, which is called the DigixDAO token, which is a token for a Decentralized Autonomous Organization. The idea behind it is that we wanted to build a community. We wanted to have a community where they are rewarded for helping us build our platform, and to increase the usage of our tokens in the public. These tokens, there’s a total supply of two million that were ever created during our initial crowdsale, which took place in 2016. We were one of the first fully-on chain ICOs on Ethereum. During our raise, we raised about 465,000 ethers, which, at that point, was about $5.5 million. We did that in less than 24 hours. We raised that amount. We were capped at $5.5 million. The idea behind this is that people that have participated in the crowdsale can state these tokens into our smart contracts. What happens is they would lock these tokens up for a period of three months. For those three months, they can participate in the voting. They can vote, they can propose and they can moderate if they have enough reputation on the network. They can moderate proposals and help us control and foster community cooperation. We have the gold token, but we don’t know all the use cases for gold token. We can think of a few use cases that we can focus on, but there are more use cases than we can ever think of for this product.
You were talking about being able to take your protocol and apply it to even other assets. My background is in real estate. How could you use the Digix coin to tokenize real estate?
We can have it the same way. Buying a real estate would have the escrow and all these other things that are part of the home buying experience. You can create that same process and put that on our platform. You can tokenize the house or any other asset that you want to tokenize that can be held by multiple parties that can be passed between multiple parties and verified by other parties as well.
What is your background? It sounds like you’re already deep in the tech world before you got into blockchain and so were your cofounders. How did you guys come up with the idea that you were going to leverage your backgrounds in either Fintech or in more traditional trading? What other areas were you working in, and what made you go, “We’ve got to do this?”
Kai C. and I started mining Bitcoins back in 2010, 2011 together. We were always looking at the price of Bitcoin going up and down and not having any basis for its base price besides the speculation in the markets. We thought, “Why don’t we put a stable coin?” We thought that gold would be the perfect asset class. It’s the most generic one. It’s not tied to a specific sovereign nation. Historically, it has been used as an asset class for either as money or as an investment. We thought that this would be a perfect initial use case for our protocol, tokenizing it and making sure that it is a trusted token.
It’s been a few years. Did you guys plan to be moving to other use cases and other assets sooner, or this is running on target?
We launched our DAO platform. We’ve had many recommendations in what we can do with this now. All of these ideas are starting to come together. One of the ideas that have been pitched to us by somebody privately was to have endgame tokens being backed by physical gold. We have a multiplayer online game that has some token. You can trade those for physical gold, adding more value to the gamification of the game itself.
I’ve interviewed a few people that are in the gamification of blockchain space. To have yours backed by a real asset like that is pretty awesome.
The other use case that we’ve all thought of is using gold as collateral for peer-to-peer lending. There have been peer-to-peer lending platforms on the blockchain using Bitcoins and other cryptocurrencies. The problem with that is there’s a price issue. If I’m loaning you an asset that can fluctuate in price, then that can affect my decision of whether I should loan it to you or I should hold onto it, that asset. The appreciation might be more than what I can collect interest from. If we have a stable asset, those issues don’t come up. There’s this physical gold. You know that gold has a relatively stable price. That gives you the ability to create a better loan platform. For example, you can use it also for insurance. You can lock up some gold to pay for certain things if certain events happen.
It can work as its own value system based on insurance. Speaking of a volatile currency that you might not want to always keep in, it sounds like you guys raised originally $5.5 million in Ethereum but, at some point, it was also worth up to $80 million. When did you cash out of Ethereum and jump off the Ethereum train?
We are still on the Ethereum train. We still have that. We’ve taken about 60,000 ethers for a proposal. We submitted a proposal to help fund us finish the development of the centralized organization platform, and as well as to help us bootstrap some of the other business expenses that we had in running the gold platform to help it move along. We still have about 260,000 ethers on the contract itself that are waiting to be voted on and distributed for different projects. We’re strong supporters of the Ethereum network. I actually made the first transaction on Ethereum, believe it or not, and also the first piece of purchase on Ethereum. That is now about $2,000. It was five ethers at that point.
You’ve got a lot of projects coming up. Can you talk a little bit about the upcoming projects and your roadmap ahead?
We’re working on some partnerships. We want to build the ecosystem and find people to accept DGX gold token. We partnered with a lot of point of sale companies that are building a crypto-based point of sale systems that retailers can have and they can accept DGX tokens. We’ve worked with crypto debit card companies. Basically tokens, and you swipe it using your Visa or MasterCard. That’s one of those things that we’re working on. We’re working on listing on different exchanges. Also, we’re working on some of the scaling solutions as well to help us have more transactions through but that’s not limited by the Ethereum blockchain.
What debit cards are you working with? The only debit card that I know of is BitPay. That’s the only one that I’ve used. What debit cards are you looking for?
There’s TenX out in Singapore. It supports several different cryptocurrencies including Bitcoin and also Ethereum. There’s also TokenCard out in Europe. We’re finishing up that project as well. Hopefully, you’ll see a DGX gold-backed debit card in Europe. There’s an interesting video that we posted where Kai C. paid for dinner using DGX gold in one of the restaurants in Singapore.
How many restaurants do you have that accept DGX?
If I’m not mistaken, there are about twenty in Singapore that has that point of sale system. We want this to be a global thing.
Your utility coin incentivizes people when they give you good feedback to improve, other than the community app. Have you ever had any questions come in from the users that stumped you or requests or suggestions that, “You’ve got to do this,” and you’re like, “How on earth would we do that? How does that even work?”
Most of the questions that have stumped me have been the regulatory type of stuff. Thankfully, we have a good legal department that’s been helping get all the legal clarity and legal opinions in various jurisdictions. It’s been good. When you build a blockchain company, there is an asset involved in it and it might look like security, so regulators will take a look at it. It’s like, “Is this a security? Is there a risk for money laundering? Can this be used by criminals and how can we make it stop?” We’ve been putting our heads together to make it a solid product that can be accepted globally as a peer-to-peer currency and also be accepted by regulators. We’ve been doing a lot of that work. Particularly, also with our DAO as well because there is a reward system around it. We’ve made it in a way so that it would be regulatory okay with various jurisdictions.
We launched our DigixDAO platform. That platform is where people can submit proposals and get rewarded for these submissions of their proposals in the form of DGX tokens every quarter. We encourage people like your readers. If they’re interested in participating in a decentralized organization, please check us out on our website. Our governance platform is on Community.Digix.Global. If you have DGX, you can get DGX from various exchanges. It’s on Mindlance and several other exchanges. You can look at DGD on CoinMarketCap. That will tell you where to get them and the current price. On Community.Digix.Global, you can participate and start submitting proposals. If you don’t have enough reputation to send me proposals, you can always reach out to us on our social media. You can get that on Digix.Global website. They’re easy to remember.
I appreciate you taking the time to talk with our audience and tell us more about what we can do to contribute to a decentralized organization and give you, hopefully, some great ideas for how you can grow your next innovation.
Thank you for having me.
Thank you, Anthony Eufemio for joining me. I’ll catch you next time.
Important Links:
- Digix
- Kai C. Chng
- Shaun Djie
- Tether
- DigixDAO
- BitPay
- TenX
- TokenCard
- Community.Digix.Global
- Mindlance
- CoinMarketCap
- Digix.Global
About Anthony Eufemio
Anthony is an 18 year veteran of the software development, computer security, and IT industries. He has a Bachelors of Science in Computer Science from Viterbi.