What Is PAX Gold (PAXG)?. Physical gold reserves in London vault… | by CointradeIndia | Dec, 2022
Physical gold reserves in London vault back PAX Gold (PAXG), an ERC-20 stablecoin. Through PAXG, users can invest in gold fractionally without having to worry about storage and transportation costs. Digital assets such as PAXG can be traded on centralized crypto exchanges and decentralized exchanges.
Thousands of years have passed since gold was first considered a valuable commodity. Jewelry can be made from it, value can be stored in it, and inflation can even be hedged with it. The average retail investor, however, may find it difficult and expensive to purchase physical gold. As a first requirement, gold requires a safe storage location, such as a bank vault. Furthermore, gold’s heavy weight makes it difficult to transport from one location to another. Paxos Trust Company holds physical gold reserves backed by PAX Gold (PAXG), an ERC-20 stablecoin. An individual PAX Gold token is equal to one troy ounce of an actual 400-ounce London Good Delivery gold bar that is kept in a secure gold vault, such as Brink’s. In the case of PAXG, its value is directly linked to the real-time market value of the physical gold it represents.
Regulations and approvals are provided by the New York State Department of Financial Services for PAXG. Paxos maintains its gold reserves through monthly checks performed by a third-party auditing firm that publishes attestation reports on its official website to confirm that the gold reserve matches the supply of PAXG tokens. Throughout the development cycle of PAXG’s smart contracts, regular audits are conducted to identify potential vulnerabilities and bugs. PAXG’s assets are also protected from bankruptcy and kept separate from those of the company by Paxos.
The Ethereum blockchain powers PAX Gold. Since PAXG is ERC-20 compliant, it can be added to Ethereum wallets, it can work with DeFi DApps, and it can be traded on cryptocurrency exchanges like Binance. The advantages of owning PAXG include the absence of vault storage or custody fees, as opposed to owning physical gold bars. The transaction fee for PAXG transactions is only 0.02%, and some ETH is charged as gas fees. Users are able to own fractions of physical gold bars without paying fees, storing them, or transporting them.
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