What are the implications of PAX Gold usage | The Financial Express

What are the implications of PAX Gold usage

According to Cointelegraph, PAX Gold is a cryptocurrency which receives support from gold reserves of Paxos, a New York-based profit company

What are the implications of PAX Gold usage
Asset-oriented tokens are considered digital representations of physical tokens that carry the redemption value for the underlying asset

With developments in the trend of non-fungible tokens (NFTs), cryptocurrencies and other investment options, physical commodities such as gold are still reportedly in high demand. Cryptocurrency company PAX Gold’s (PAXG) aim is to bring democracy and availability to daily investors, to allow their trading like other cryptocurrencies, as reported by Cointelegraph.

According to Cointelegraph, PAX Gold is a cryptocurrency which receives support from gold reserves of Paxos, a New York-based profit company. Every PAXG token has linkage to a 1:1 ratio to one troy ounce (t oz) of a 400-ounce London Gold Delivery gold bar kept at Brinks Security vaults in London. Reportedly, PAX Gold investors are kept out of the problems related to storage and transportation of physical gold. PAX Gold consists of a combination of traits around physical gold ownership and cryptocurrency which provides solutions on challenges around the gold market such as high costs, storage concerns, lack of liquidity, among others. 

On the basis of information by Cointelegraph, the PAX Gold token is developed over the Ethereum blockchain, which allows th feature of portability among wallets, exchanges, decentralised finance (DeFi) platforms, and other Ethereum-based applications. PAXG allows users to trade, stake or redeem their tokens for golf bars. Reportedly, PAXG charges a 0.02% transaction fee. Both PAXG and its holding company Paxos Trust are under the legal surveillance of New York Department of Financial Services (NYDFS). Furthermore, PAXG has the potential to ensure separate protection for both consumers and company’s assets. PAXG goes through monthly audits from a third-party auditing firm to ensure that gold reserves match the supply of PAXG tokens. 

Moreover, Cointelegraph noted that asset-oriented tokens are digital representations of physical tokens that carry the redemption value for the underlying asset, which include gold, oil, real estate, equity, soybeans, among others. Through asset-backed tokens, the inaccessibility factor for certain markets have been removed, and there is potential ensurance in security and transparency of business relationships.

(With insights from Cointelegraph) 

Also Read: Cryptocurrency community calls out exchanges over alleged public relation stunts for LUNC tax burn

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First published on: 12-09-2022 at 15:45 IST