• Tokenized gold assets have surpassed $1 billion in combined market capitalization as of Tuesday.
• Tokenized gold is a type of stablecoin that pegs its price to gold, while the tokens on the blockchain represent ownership of physical gold managed by the issuer.
• The rising price of gold, a traditional safe-haven asset, has been driven by investor concerns about flailing banks and possible government bailout.
Tokenized Gold Surpasses $1B in Market Cap
Tokenized gold assets have surpassed $1 billion in combined market capitalization on Tuesday, according to data by crypto price tracker CoinGecko. This milestone was achieved due to the rising price of gold, which is a traditional safe-haven asset for investors during times of economic uncertainty.
What is Tokenized Gold?
Tokenized gold is a type of stablecoin that pegs its price to gold, while the tokens on the blockchain represent ownership of physical gold managed by the issuer. It offers investors a way to get exposure to the precious metal without the management fees of an exchange-traded fund (ETF) or the burden of storing gold bullions.
The Two Largest Gold Stablecoins
The two largest tokenized gold offerings are paxgold (PAXG) issued by New York-based fintech firm Paxos Trust Company and tethergold (XAUT) issued by Tether, which also issues USDT with an $80 billion market cap. As per CoinGecko data, PAXG’s market cap stands at $518 million and XAUT’s stands at $499 million respectively.
Rising Price Of Gold
Gold’s climbing prices have been driven mainly due to investor concerns about banks failing and potential government bailouts resulting in expanding fiat money supply and currency devaluation. In March 2021 alone, it peaked at its highest level since 2011 at around US$ 1,768 per ounce before settling back down again slightly this month.
Investment Opportunity
Tokenized gold provides investors with an opportunity to gain exposure to precious metals without incurring management fees associated with ETFs or having to store physical bullion. It remains to be seen if tokenized investments will become more popular than traditional investments as people increasingly embrace digital currencies such as Bitcoin and Ethereum for their financial transactions worldwide