Your Guide to Precious Metals on the Blockchain
Tokenized precious metals create the potential for fractional ownership of gold and greater transparency. Indeed, the world’s largest bank, JPMorgan, is prepared to use its proprietary blockchain to tokenize gold, and the Royal Mint has pursued technologies to achieve the same.
As CCN reported, some venture capitalists believe Bitcoin will replace gold as a store of value. But, what happens if you combine blockchain and precious metals? Financial powerhouses and blockchain startups alike are investigating the intersection between precious metals and blockchain.
JPMorgan, the most valuable bank by market capitalization in the world, intends to use its enterprise version of the Ethereum blockchain, Quorum, to tokenize gold bars.
First announced in October 2016 as part of Ethereum Enterprise Alliance (EEA), Quorum is marketed as a blockchain-powered system that aims to “significantly reduce” the number of parties required to verify global payments, cutting transaction times “from weeks to hours.” JPMorgan’s head of blockchain initiatives, Umar Farooq, elaborated on tokenization:
“They wrap a gold bar into a tamper-proof case electronically tagged, and they can track the gold bar from the mine to endpoint – with the use case being, if you know it’s a socially responsible mine, someone will be willing to pay a higher spread on that gold versus if you don’t know where it comes from. Diamonds is another example.”
He added: “We are the only financial player that owns the entire stack, from the application to the protocol.”
The potential for blockchain and gold market was recently underscored when, on October 19, the London Bullion Market Association (LBMA), a wholesale over-the-counter market for the trading of gold and silver, announced its plan to modernize transparency in the industry with blockchain.
While asking its 144 members (the world’s largest gold refiners, banks and dealers) for proposals on how to track gold from mines to its final destination and prevent forgery of gold bars, a common theme became apparent. Of the 26 proposals the association received “from companies ranging from startups to major technology firms” including IBM, “more than 20 of the 26 responses” reportedly used blockchain in their project drafts.
The Royal Mint, Britain’s official mint, once sought to offer services that let businesses and investors buy and sell digital tokens representing physical gold via blockchain transactions. The U.K. government, to be sure, stopped such plans.
Developed in collaboration with the Chicago Mercantile Exchange and using technology from two blockchain startups, the Royal Mint system intended to transact blockchain tokens called Royal Mint Gold (RMG). The tokens digitally represent one gram of real gold stored at the Mint’s facilities. The RMG price would have tracked the spot price of gold. The Mint planned to issue $1 billion in tokens, and investors would be able to trade RMG digital tokens via an institutional trading platform.
Beyond the abovementioned institutions, many blockchain-focused projects are working on gold-related projects.
The More Established Blockchain Players (Alphabetical order)
This decentralized autonomous organization, backed by Global Brain Corporation and Fenbushi Capital, created a digital token (DGX) backed by 99.99% gold cast bars from London Bullion Market Association-approved refiners. DGX is built on the Ethereum blockchain.
DigixDAO, whose token peaked at $553.80 according to CoinGecko but currently sits at approximately $20, began trading in late September at less than $1.
Paxos (Paxos Standard)
The New York-based Paxos creates blockchain solutions for financial institutions. Their product Bankchain, is a settlement platform transforming post-trade across capital markets. Paxos Standard remains just shy of the price at which it began trading in October.
The New York-based Tradewind is adding physical silver to its digital trading platform six months after launching its digital gold product. “We are hearing from our network of dealers that there is a growing demand from their customers to include silver on the platform,” Fraser Buchan, co-founder of Tradewind said.
Tradewind is backed by gold industry players, such as IEX Group, an innovative stock exchange; Sprott Inc., a global alternative asset manager; and, Goldcorp Inc., one of the world’s largest gold producers.
The US-based Veritaseum’s precious metals tokens VeGLD (Gold Token) and VeSLV (Silver Token) are fully redeemable to the bearer and backed 100% by gold or silver. The value of the tokens is reportedly designed to mimic the volatility of major global currencies like CNY, USD, and EUR, reducing long-term volatility.
Precious metals are securely stored and insured with reliable depositories via COMEX approved vaults for global redemption and delivery to anywhere in the world. Veritaseum was founded by Reggie Middleton. Veritaseum purports to enable software-driven P2P capital markets without brokerages, banks or traditional exchanges.
Veritaseum (VERI) reached its peak of $466 on January 8, 2018. It’s currently priced at $15.71.
Bitcoin Gold (bitcoingold.org)
Bitcoin Gold spiked to $456 in December 2017 as part of the crypto bubble then, and today sits at $13.05. But, considering how many experts believe that Bitcoin itself is acting less like the “electronic peer-to-peer cash system” Satoshi Nakamoto envisioned, and more like digital gold, Bitcoin Gold could prove a competitor to Bitcoin Cash, etc. The project has been around for many years now, which gives it an advantage over many tokens.
CEDEX wants individual investors to securely and easily trade gold, silver, and diamonds. Sellers could list their precious metals on the CEDEX platform and then deliver them to a custodian, who would release them to the buyer once the transaction is complete.
On September 6, 2018, CEDEX reached its all time high of 18 cents. Its current price is .04 cents.
Based in Zug, Switzerland, the Darico Ecosystem revolves around the Darico Terminal. The company hopes their tools with allow users to monitor trade, invest and spend cryptocurrencies all from one integrated ecosystem. DEC is currently traded on IDEX and Bilaxy. Five days after DEC trading began on October 1, 2018, the price spiked .08 cents. Its price currently stands at .07 cents.
Switzerland-based Eidoo is creating a more stable ERC-20 token by tying it to the gold price. Each token, redeemable for one gram of 99.9 percent fine gold, will be stored in its vaults and audited every 90 days. Its native token is “EDO”.
“People will be able to see the gold stored in the security vaults through a video camera, we will post a link on the website so everyone can control the gold,” Natale Ferrara, the startup’s founder, told CoinDesk. “Each Ekon token will be backed by … [24-karat gold], so we will issue new tokens only if the gold is available and only if the user has completed the KYC and all the legal requirements that the Swiss law requires.” Eidoo raised $27.9 million in a token sale in October 2017. EDO peaked at $6.99 on January 8, 2018. Its current price is around 80 cents.
GoldMint (GOLD & MNT)
The Moscow, Russia-based GoldMint is a blockchain-based platform that uses GOLD digital assets, which are 100% backed by physical gold or exchange-traded funds (ETF).
GoldMint helps traders and investors manage volatility risks and gain competitive commissions on commodities sold via GoldMint to financial institutions, pawn shops, and other business and individual stakeholders. The GoldMint platform leverages the private and individual gold trading market.
The company would also like to manage larger physical stocks like those in central banks and create an electronic payment solution tethered not to the US Dollar like the crypto-network Tether, but instead to physical gold. The company also envisages a gold lending peer-to-peer lending system.
GoldMint depends on two native tokens, GOLD and MNT. The former is an investment tool and completely backed by physical gold and/or an exchange-traded fund (ETF). One GOLD token is the equivalent of one ounce of gold on the LBMA. MTN is GoldMint’s native cryptocurrency and is used to confirm GOLD transactions. GoldMint miners, the amount of MNTs reflects how many assignments or transaction blocks they can accept. GoldMint tokens are available on EtherDelta and YoBit. Listed as MNTP on CoinGecko, this token began trading in June 2018 at .80 cents, and currently is priced at .23 cents.
Global Gold Token (GGT)
Global Gold Token (GGT) began trading in late October for about $1.21, and currently trades for about .44 cents.
The Malaysia-based HelloGold lets users buy and sell instantly, send gold to anyone with a HelloGold account, withdraw your cash and redeem your physical gold on their app. The coin is on exchanges EtherDelta, Coss, and HitBTC. Since a peak price of .22 cents in January 2018, HGT has declined to .002 cents.
KaratGold is based in Stuttgart, Germany. Each coin represents a certain weight of gold and can be exchanged into physical gold in the form of CashGold. On July 4, 2019 100 KBC will equal 1g of gold. Exchanges with KBC include YObit.net, Coinbe, Hitbtc, and Coinsuper. After reaching an all-time high of .02 cents in September 2018, KBC has since waned in price. Its current valuation is less than .19 cents.
PureGold (PGT and PGG)
Based in Singapore, puregold.io has two tokens. PGT is for transactions and PGG is a digitized form of physical gold. PGG is the native digital token dedicated for gold-enabled crypto transactions. PGT is available at the Token Store. PGT first traded on October 19, 2018, and, according to CoinGecko, was priced at about .20 cents. It currently is trading at .03 cents.
GoldFinX (GFX) provides financing to Artisanal Small Gold Mines (ASGM) worldwide and gets in exchange of share of their production. The first production of gold will be delivered by Q2 2019, and will accumulate as well as stored indefinitely to back the value of the GiX coin. Pre-sale started July 1st, 2018 and ended no later than December 31st, 2018. The GiX ICO launches in January 2019.
The TruGold ICO is set to take place beginning February 19, 2019. TruGold is an electronic distribution system to digitize the production of gold for peer-to-peer daily transactions–or to redeem for physical gold.
Anthem Gold (Anthemgold.com)
Anthem Gold is a cryptocurrency developed by Anthem Vault Inc. Each ANTHEM (AGLD) is backed by one gram of physical gold, securely vaulted with a nonbank operator and fully insured. Anthem Gold is a related to Anthem Vault, which has been buying and selling cryptocurrency for gold since 2011.
US-based Emergent Technology Holdings in February 2018 announced its “Responsible Gold” supply chain along with “G-coin,” a digital token allegedly based upon “responsibly sourced gold.” Emtech’s blockchain-powered, gold supply chain platform tracks “responsibly sourced gold from the miner-to-refiner-to-vault.” The company’s partners include key industry players like Valcambi Sa, Asahi Refining and Yamana Gold to structure its G-Coin tokens.
In an interview with CNBC, Emergent’s chief commercial officer, Mitchell Davis, told CNBC that the company’s approach was “fundamentally different” than others in the space because of their focus on “responsibly sourced gold.”
“G-coin,” is reportedly created with NYSE-listed Canadian mining company called Yamana Gold. One coin equals one gram of “responsibly sourced gold,” and is pegged to gold’s spot price. G-Coins are invitation only.
Which Blockchain-based gold projects are best?
The industry seeking to place gold on the blockchain is nascent, and large players are positioned to ensure that, should blockchain become a viable way to manage gold trading, they have the tools and technologies to participate in the market. Its hard to recommend a new gold project when JPMorgan is working on a platform designed to do the same.
Still, projects like Paxos have been around long enough, and made sufficient progress over that time, to be considered a leader in the gold on the blockchain space. Veritaseum and Digix both have enjoyed media coverage and are live for trading at this time, but neither have made so much progress in tokenizing gold to be a sure bet. For now, I will stay on the sidelines of the crypto-gold market. Considering that Bitcoin has long been called “digital gold”, I would participate instead in that market first.
Sudan Gold Coin
Tiberius Coin (TCX)
OneGram Coin (OGC)
Dubai, United Arab Emirates.
Dubai, United Arab Emirates.
The Midas Touch Gold (TMTG)
Seoul, South Korea.
Crystal Palace, BTC City, Ameriška ulica 8, Ljubljana, Slovenia
Featured image courtesy of Shutterstock.