What is PAX Gold (PAXG) and how does it work?￼
PAX Gold is a cryptocurrency-gold hybrid that links the two investment alternatives. It provides cryptocurrency security and stability.
Nonfungible tokens (NFTs), cryptocurrencies, and other contemporary investment possibilities have been popular in recent years. Physical goods, such as gold, remain in great demand. The worldwide market value of bitcoin will exceed $2 trillion by 2021. Now, investors must decide whether to invest in cryptocurrency or gold.
Gold is a commodity that has been used for thousands of years as a store of value and a method of trade and is still popular today. Even with the development of decentralized digital money, gold has maintained its dominance. However, owning gold may be complicated and out of reach for most private investors. PAX Gold (PAXG) is a cryptocurrency startup whose mission is to make gold ownership more democratic and accessible to average people by enabling them to trade it like any other cryptocurrency.
PAX Gold has identified a way to integrate cryptocurrencies with genuine gold holdings, making it appealing to investors used to traditional options. This article will go over PAX Gold (PAXG) and explain how it works.
What Exactly Is PAX Gold?
Paxos Gold is a cryptocurrency backed by genuine gold reserves owned by Paxos, a for-profit New York business. Each PAXG token is tied to a 400-ounce London Good Delivery gold bar housed in Brinks Security vaults in London at a 1:1 ratio. PAXG, the Paxos-backed cryptocurrency, is backed by verified gold bars from the London Bullion Market Association (LBMA) and may be redeemed for genuine bullion.
PAX Gold investors avoid the hassles of keeping, safeguarding, and transferring real gold. Furthermore, shares may be purchased in fractions, making it more accessible to individual investors who would otherwise be hampered by the high cost of gold. PAX Gold combines actual gold ownership with cryptocurrency attributes to give answers to many modern-day difficulties in the gold market, such as excessive prices, storage concerns, and a lack of liquidity.
Who Is Responsible for PAX Gold?
PAX Gold was founded by the Paxos Trust Company, a financial institution and technology firm located in New York City that specializes in blockchain technology. Paxos was created in 2012 by Charles Cascarilla and Richard Teo, both former analysts at separate organizations (Cascarilla at Goldman Sachs and Teo at Cedar Hill Capital Partners).
Paxos has attempted more than one cryptocurrency project. They have launched PAX Currency (USDP), a digital United States dollar and stablecoin, in addition to PAX Gold. They have significant institutional backing and have garnered more than $500 million in total capital from investors such as OakHC/FT, Mithril Partners, and PayPal Ventures.
How does PAXG operate?
The PAX Gold token is built on the Ethereum blockchain, which allows it to be transferred across wallets, exchanges, decentralized finance (DeFi) platforms, and other Ethereum-based applications. Users may trade, stake, or redeem their tokens for high-quality gold bars on PAX Gold. The London Bullion Market Association has authenticated these gold bars, which are housed in safe vaults across the globe. Despite these high-quality security measures and gold, PAX Gold charges no custodial or storage costs — simply a 0.02% transaction fee.
Is Pax Gold secure? PAX Gold is not only gold-standard approved, but it also works reliably and transparently. PAX Gold and its parent company, Paxos Trust, are both regulated by the New York Department of Financial Services (NYDFS). Furthermore, PAX Gold safeguards both the client and the company’s assets, assuring the consumer’s security in the case of bankruptcy.
PAXG is audited regularly by a third-party auditing agency to guarantee that its gold holdings correspond to the issuance of PAXG tokens. The results of these attestations are published on the Paxos website. Furthermore, PAXG’s engineers conduct frequent smart contract audits to look for possible faults or vulnerabilities in the network.
Is Pax Gold genuine gold?
Pax gold, as previously said, is tokenized gold that works on a blockchain network. Tokenization refers to the digital conversion of both tangible and intangible assets into cryptocurrency. The PAXG token is a real gold token issued by the Paxos trust corporation. Gold is an excellent value store since it retains its worth over time. As a result, it is often employed as a hedge against inflation. When the value of the USD falls, gold becomes more costly in USD, and vice versa. As a result, gold is a popular option for investors seeking to preserve their capital against inflation.
The serial numbers on the PAXG tokens correspond to those on individual gold bars. By entering an individual’s Ethereum wallet address into the PAXG search tool, the serial number, value, and other attributes of a holder’s physical gold may be identified. They may also exchange their PAXG into fiat cash, another cryptocurrency, or allocated and unallocated gold bullion bars at the current gold market price.
What is the difference between PAXG and gold ETFs?
The primary distinction between a gold ETF and Pax Gold is that an ETF acquires a contract that replicates the price of gold, while the user does not own the underlying commodity. Each PAXG token is closely connected to a genuine gold bar stored in a London vault, and each PAXG token is worth one.
Gold exchange-traded funds (ETFs) follow the underlying commodity’s value. They only provide investors with access to the price of gold, not ownership. A gold ETF investor is a party to an agreement that offers him or her a particular proportion of the pooled gold. Gold ETFs cannot compete with physical ownership of the gold. For example, by the time the contract is settled, the contract value may be less than what you would get if you just held the gold directly.
A PAXG, on the other hand, is a digital representation of solid gold. Each PAXG token symbolizes one troy ounce of gold stored in London vaults with sequential numbers. Exchanging PAXG does not take as long as trading actual gold bars since it is processed on Ethereum as an ERC-20 token.
PAX Gold is an ideal investment for both conventional and contemporary investors who wish to keep current without jeopardizing their own objectives. With genuine gold assets represented in crypto tokens, you may invest in both physical and digital resources with a single investment, reaping the benefits of both.
How does PAX gold generate revenue?
PAX Gold will generate money in two ways: a tiny gold premium and a tokenization charge at the moment of purchase. The tokenization charge is calculated as a proportion of the original purchase value; it is 1% for purchases of one ounce or less, but substantially lower for bigger transactions. Paxos will not impose custodial costs, but it will charge a 0.02% fee anytime a consumer buys or sells a token on a blockchain network.
Can you bet on PAXG? If you lend your PAXG to a custodian, you may earn interest on it, although the rate will vary according on the lender. You may earn interest by staking your PAXG, but you must lock up your tokens for a certain amount of time. How can I get PAXG? The coin may be purchased on a number of exchanges, including Binance, Kraken, KuCoin, and Coinbase. The following are the procedures to purchasing PAXG tokens on the Coinbase cryptocurrency exchange:
Install a self-storage wallet that supports PAXG, such as the Coinbase wallet.
Keep your recovery phrase safe.
Recognize and plan for Ethereum network costs.
Purchase and transfer Ether (ETH) to your own wallet.
Use ETH to acquire PAX Gold in the trading area.
Asset-backed tokens’ future
Thing-backed tokens are digital representations of tangible assets that may be exchanged for the actual asset. That asset might be gold, oil, real estate, stock options, soybeans, or almost any other commodity.
Asset-backed tokens are making transactions that were previously unavailable and expensive possible by eliminating the requirement for a central figure. This ensures both security and openness in commercial connections. This is altering how we conduct business in the future, as well as how we think about ownership and wealth generation.
Asset-backed tokens may also aid in the resolution of challenges created by inflated or depreciated currencies, as well as the volatile stock market. Individuals now have a realistic new financial option that combines digital liquidity with actual asset values when required, owing to the possibility of asset-backed tokens. We’ve already seen asset-backed tokens deployed in a variety of applications.
Asset tokenization’s future is simply as restricted as one’s imagination. With new use cases being found on a daily basis, it’s thrilling to consider all of the ways asset-backed tokens might benefit individuals and companies all around the world.