How does PAX Gold (PAXG) Operate and What Is It?

A mix of cryptocurrency and gold called PAX Gold fills the gap between the two types of investments. It delivers cryptocurrencies’ stability and security.

Immutable tokens (NFTs), cryptocurrencies, and other contemporary investment possibilities have been popular in recent years. Physical goods like gold are still in high demand, though. The bitcoin market capitalization surpassed $2 trillion in 2021. Investors should now ask themselves: Should I select gold or cryptocurrency?

Since it has been used as a means of exchange and a store of value for so long, gold is a commodity that continues to be successful today. Gold remained popular despite the development of decentralized digital money. However, acquiring gold can be challenging and out of reach for the majority of individual investors. A cryptocurrency firm called PAX Gold (PAXG) aims to increase the accessibility and democracy of gold ownership by enabling trading similar to that of other cryptocurrencies.

Investors accustomed to conventional options are drawn to PAX Gold because it has figured out a way to integrate cryptocurrencies with real gold holdings.

Describe PAX Gold

The cryptocurrency Paxos Gold is backed by physical gold reserves held by Paxos, a nonprofit organization with headquarters in New York. Each PAXG token is directly connected to a troy ounce (t oz) of a 400-ounce gold bar marked “London Good Delivery” that is kept in a London vault run by Brinks Security.

Bitcoin backed by Paxos Gold bars verified by the London Metal Market Association (LBMA) is the basis for PAXG, which can be used to purchase actual bullion.

Investors in PAX Gold are relieved of the trouble of securing, transporting, and storing actual gold. Additionally, because the shares can be purchased in installments, they are more readily available to individual investors who would otherwise be constrained by the high price of gold.

The properties of both real gold ownership and cryptocurrencies are combined in PAX Gold, which offers solutions to many of the problems facing the gold market today, including high prices, storage issues, and a lack of liquidity.

Why Is PAX Gold Being Used?

PAX Gold was developed by Paxos Trust Company, a financial institution and blockchain technology company with headquarters in New York. In 2012, Charles Cascarilla and Richard Teo, both former analysts at various companies (Teo at Cedar Hill Capital Partners and Cascarilla at Goldman Sachs), launched Paxos.

Paxos has worked on other cryptocurrency projects in addition to PAX Gold. In addition to PAX Gold, they also developed the stablecoin and digital US dollar known as the PAX Dollar (USDP). They have garnered substantial institutional backing and have secured over $500 million from backers like PayPal Ventures, OakHC/FT, and Mithril Partners.

How is PAXG organized?

The Ethereum network, on which the PAX Gold token is based, enables portability between wallets, exchanges, platforms for decentralized finance (DeFi), and other Ethereum-based applications. Users of PAX Gold can exchange, stake, or redeem their tokens for fine gold bars. The London Bullion Market Association has authorized these gold bars, which are kept in safe vaults all around the world. Even with these excellent security measures and premium gold, PAX Gold only charges 0.02% in transaction costs and does not charge any custody or storage fees.

Can I trust Pax Gold?

In addition to being accredited to the gold standard, PAX Gold also runs consistently and openly. The New York Department of Financial Services has legal control over PAX Gold and its holding firm, Paxos Trust (NYDFS). Furthermore, PAX Gold offers consumer security in the event of bankruptcy by independently defending the client and the business’s assets.

To make sure that its gold holdings correspond to the quantity of PAXG tokens, PAXG is subject to monthly audits from a third-party auditing company. The reports that result from these certifications are made available on Paxos’ official website. Additionally, the creators of PAXG regularly examine smart contracts for errors or network vulnerabilities.