WHY THIS MATTERS IN BRIEF
Tokenised gold is a new form of Web 3.0 digital asset that’s backed by gold, and it shows just how much technology is changing assets and money.
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Tokenised gold assets surpassed $1 Billion in combined market capitalization on Tuesday, according to data by crypto price tracker CoinGecko, as gold’s price neared its all-time high.
Tokenised gold is a type of Stablecoin that pegs its price to gold, while the tokens on the blockchain represent ownership of physical gold managed by the issuer. It offers investors a way to get exposure to the precious metal without the management fees of an Exchange Traded Fund (ETF) or the burden of storing gold bullions.
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The two largest gold stablecoins, by far, are Pax Gold (PAXG), issued by the New York-based fintech firm Paxos Trust Company, and Tether Gold (XAUT), issued by Tether, the same company behind the $80 billion-pegged stablecoin USDT. At the time of publication, the market cap of PAXG and XAUT is $518 million and $499 million, respectively, per CoinGecko data.
The price of gold, a traditional safe-haven asset, has risen since March amid investor concerns about flailing banks and a possible government bailout, which would lead to expanding fiat money supply and currency devaluation. The metal was trading at $2,021 per ounce on Tuesday, just some 3% off its all-time high recorded in August 2020.
Bitcoin, which is often called digital gold due its program-coded supply cap, has rallied to as high as $29,000 from $20,000 in tandem with gold’s surge. BTC’s correlation with gold hit a multi-year high last week, surpassing equities, digital asset market research firm Kaiko reported Monday.
