You try and tell a Victorian gold miner from the 1850s that one day people would be buying digital currency in order to invest in the precious metal, and they wouldn’t believe you.

Cryptocurrency adviser DigitalX (ASX:DCC) has become the latest company to get into the gold-backed blockchain currency game, with an investment into Bullion Asset Management Services (BAM), a Singaporean business creating a gold-backed cryptocurrency stablecoin called XGold.

A stablecoin is a digital currency attached to an established asset, rather than digital assets like Bitcoin or Ethereum, which are at the mercy of market forces.

DigitalX has paid $1.25 million for a 17.5 per cent interest in BAM, and will also provide blockchain technical services, blockchain auditing, media & PR, corporate advisory and exchange listing introductions to “assist in the success of XGold”.

Each XGold token is backed with 1 gram of gold bullion. It is designed to allow “investors to purchase, transfer and store digital gold” with all new token issues and redemptions recorded on a blockchain.

DigitalX follows in the footsteps of PCF Capital, which last year sought to launch a cryptocurrency for investing in gold mines.

That currency, called FutureGold, was to be a security token. A ‘security token’ is usually backed by an asset rather than a regular cryptocoin or token whose value isn’t necessarily based on anything. Unlike a stock, however, they doesn’t confer ownership.

But PCF Capital boss Liam Twigger — who last year told Stockhead FutureGold was an alternative to ASX-listed shares and hoped to raise $250 million from sales of the token — said his company had gone cold on the idea of a security token and would instead offer a “digital security that will seek to meet Securities and Exchange Commission (SEC) regulations and compliance requirements”, following an erosion of public trust in security token and initial coin offerings (ICOs).

“There is still a fair bit of hesitation and reticence surrounding ICOs and security tokens and nervousness around hacks,” he told Stockhead. “So I think the two may have had their day, run their race.”

Twigger said PCF would raise 80 per cent of the funds for its digital security in New York, and hoped to have the money raised and the security issued by the end June.

Of DigitalX’s move he said anything that promoted gold was “good in my book”, though he was cautious about the partners in the deal. BAM holds a supply contract with Jaggards, an Australian producer of precious metal and gold bullion, and a distributor of gold bullion from Produits Artistiques Métaux Précieux (PAMP), one of the world’s leading gold bullion brands.

“People do need to understand that there is some risk with a counterparty being a private operator rather than an establishment like the Perth Mint or a government organisation,” he said.

It is worth noting however that Twigger is a non-executive director of Gold Corporation, which operates the Perth Mint.

The International Monetary Fund (IMF) and the World Bank recently launched a private blockchain, as well as a ‘quasi-cryptocurrency’ called Learning Coin, which will be accessible only within the IMF and World Bank.

Henrik Andersson, partner at Apollo Capital, recently told Stockhead that increased support from institutions was leading a resurgence in the value of cryptocurrencies.