We often hear about Bitcoin being called ‘digital gold’. However, tokenisation now allows for the digitisation of actual gold as well.
Just last week, Turkey’s largest clearing and settlement bank Takasbank announced the launch of its physically-backed, blockchain-based electronic gold transfer system.
The Takasbank digital gold transfer system
Called ‘BiGA Digital Gold’, the Takasbank digital gold transfer system will allow the “transfer of gold from person to person without time constraints with blockchain technology”. The statement adds that this is “based on physical gold and can be converted to a digital asset”.
While the official press release was only recently made public, research for the BiGA system began in 2018. Moreover, Takasbank announced its first successful trials in September 2019.
Beyond BiGA for gold, the bank is also exploring the use of blockchain to digitise physical commodities in the financial sector. According to the statement released on December 30:
“As a result of our efforts, we created the Digital Asset Transfer Platform, which distinguishes itself from many similar projects in the world by allowing the use of blockchain technology to transfer digital assets based on physical commodities, not having any value of its own, and ensuring full compliance with existing regulations.”
According to the bank, one digital asset on BiGA represents “a gram of gold that is physically stored” in the vaults of the Borsa Istanbul Turkish stock exchange.
The system will provide three main transaction services: issuance, repayment, and transfer.
Large Turkish brands join the Takasbank initiative
That Turkey’s largest clearing and settlement bank should be pioneering such an initiative shows the country’s commitment to blockchain in the financial sector. However, it’s not just Takasbank enabling the digitisation of gold. Other major Turkish brands are participating as well.
These include state lenders Vakif and Ziraat and private sector lenders such as Garanti BBVA. Private and state banks taking part include Ziraat Participation, Kuveyt Turk, and Albaraka Turk.
Turkey ramps up its blockchain commitment
This latest initiative by Takasbank complements a growing push into the blockchain sector by Turkey. At the end of last year, President Erdogan pledged to finalise testing for its digital Lira (Turkcoin) in 2020.
The government is also beginning to ramp up its investment in blockchain technology in other areas. These include the country’s economy and public services sector.
Some 20% of Turks already actively use cryptocurrencies, and there is a growing amount of start-ups in the blockchain and cryptocurrency space. Even though 2020 is barely underway, blockchain in Turkey is already gaining momentum.
It will be interesting to see what other initiatives emerge from this developing country in the run-up to Istanbul Blockchain Week in April – and how far ahead the country is in the global CBDC race.