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On-Chain Alchemy: Merging the Worlds of Crypto and Gold

September 3, 2023
x min read

On the surface, gold and crypto seem at distinct odds with each other in nearly every way.

And yet, there is a growing number of startups pushing to merge the two worlds together.

What’s happening:

  • Startups and early stage companies have been exploring the intersection of gold and crypto, building new technology to merge the two assets together in innovative ways
  • Playing on the trend of real world assets on the blockchain, there are a number of crypto applications and startups leveraging gold to build the digital future

Who is making moves:

  • Tether Gold, arguably the most recognizable crypto project bringing together gold and the blockchain, has established a system in which their token is both backed by gold and redeemable for physical gold
  • Paxos Gold, following a similar approach to Tether Gold, has a 1:1 ratio in which each token is equal to one ounce of physical gold
  • TradeWind, a New York based startup, has built a platform known as ‘VaultChain’ which allows users to buy physical gold on the blockchain and redeem it for physical gold at their choosing. Recently, TradeWind was acquired by publicly traded DeFi company Wellfield (TSXV: WFLD)
  • Matador Gold Technologies, a Canadian startup who have notable shareholders such as HIVE Digital (NASDAQ: HIVE) and Osisko Mining (TSX: OSK), is developing an app that will allow users to buy, sell and redeem physical gold all on the blockchain

Why it matters:

  • Gold is an enormous asset class which has seen very little technological innovation over the last few decades, which could allow crypto to be a potential onramp for new capital flows.
  • The implications of gold and crypto operating in tandem are reaching well beyond the startup community, with the Zimbabwe central bank recently launching a gold back token for its citizens to try to handle runaway inflation and monetary instability in the country.

Yes, but:

  • Bringing gold and crypto together in a way that is regulated and transparent is not as simple as it may seem, with many projects running into significant legal challenges.
  • Perth Mint Gold Token, which was only crypto token for gold that was actually backed by a government, collapsed after it was revealed that the Perth Mint gold bullions didn’t meet the standards legally required.
  • Goldmoney (TSX:XAU) has built a global platform which allows individuals to purchase gold digitally that is then held in their name at a physical vault, without needing to intersect with crypto in any way.
  • New crypto projects poise at least some level of counterparty risk, which is a stark contrast to owning physical gold or precious metals which can be insured

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