Paxos Gold (PAXG) is an ERC20 token that represents an ounce of gold on the Ethereum blockchain and was launched by Paxos last September.
Like Tether Gold (XAUT) and Eidoo’s EKON GOLD (EKG), Paxos Gold aims to solve the fundamental problem of the gold market. In traditional markets, investors do not have access to a high-quality physical gold product that is easy to own and trade. Investors can buy large quantities of physical or allocated gold, but with high risks due to the size of the precious metal: expensive to store, not easily divisible, inconvenient to move and therefore difficult to trade or use.
The alternatives are even worse. Wholesale, unallocated gold, gold ETFs or gold futures, these are only derivatives or securities, which do not involve ownership of the underlying gold. Basically, it is synthetic gold without any physical bars linked to it. The asset is easy to trade but without any real underlying.
Guide: how does Paxos Gold work
Paxos has decided to harness the benefits of a distributed ledger offered by blockchain technology, defined as immutable because thanks to its decentralization, it resists malicious attacks intended to alter it.
Last September, Paxos issued the PAXG digital token as an ERC20 token on the Ethereum blockchain, although the whitepaper does not rule out its launch on other platforms. The token corresponds to the value of a troy ounce, the Anglo-Saxon unit of measurement used for precious metals, which is equivalent to about a 31 grams of a gold bar that complies with the London Good Delivery standard, stored in Brink’s vaults.
PAX Gold is regulated by the New York State Department of Financial Services (DFS or NYSDFS), and does not represent any amount of unallocated gold, but an ounce of physical gold from a specific serialized gold bar.
The registration of that bar is then transferred to the token holder, who can visit paxos.com to see the serial number, purity and weighting of each bar to which their tokens are assigned by simply entering their Ethereum address.
Where to buy Paxos Gold
Second after Tether Gold for market capitalization, Paxos has a market cap of $25 million and is tradable on ITBit (the Paxos exchange), Kraken and Bithumb, paired with BTC/ETH/USD/EUR. PAXG futures are already tradable on FTX.
Nexo bought $5 million of PAXG last week, following the interest shown by its investors, allowing it to be used in lending.
To make the purchase of tokenized gold attractive to traditional investors, Paxos makes it possible to trade PAXG with fiat money in addition to BTC, ETH and the stablecoins BUSD, PAX. Paxos customers can also redeem physical gold through a network of supported resellers.