You may have heard about the benefits of tokenisation by now. Through blockchain technology, we can tokenise real-world assets such as fine art and real estate, unlocking their value and making the transfer of ownership a breeze.
With lingering regulatory uncertainty, we may be some way off the tokenisation of everything. However, gold investors can now gain instant access to their wealth through tokenisation.
Tokenising gold allows investors to unlock its value
When the world economy looks shaky and the stock markets are uncertain, gold is considered a safe-haven asset. Like property, art, and antiques, gold tends to preserve its value and even increase over time (market fluctuations aside).
However, accessing your gold wealth can be a lengthy and difficult process. By tokenising gold through providers such as Paxos and its PAX Gold token, investors can now gain instant access to their precious-metal savings.
PAX Gold is a token that runs on the Ethereum blockchain. It digitally represents a physical amount of gold held in the vaults of the London-based Brink. As Paxos teams up with crypto lending provider Nexo, gold investors now find themselves with more options besides.
Through the new partnership, Nexo will allow gold investors to access their wealth in a total of 45 fiat currencies via same/next day transfers across 200+ jurisdictions.
Gold investors can now get instant credit lines
If making illiquid assets instantly liquid wasn’t enough, gold investors can now use their wealth to access instant credit lines and interest-bearing accounts. Through the NYDFS-regulated PAX Gold, Nexo will give investors the option of using it as collateral for its signature Instant Crypto Credit Lines, marking an innovative breakthrough and a way of transferring gold-backed lending to the blockchain.
As well as taking out loans by tokenising gold, customers can earn interest on their investments at a rate of 8% per year. This means that, despite the geopolitical pressures that influence gold price, it will always yield investor returns.
As a leading player in the crypto lending space, Nexo is currently the only financial institution in the world that is paying interest on gold (tokenised gold, that is).
“There’s a lot of overlap in the mentality between the crypto world and those who hold gold,” explained Paxos CEO Chad Cascarilla in a press release on Monday.
“What you now have is the liquidity, divisibility, and transferability of crypto, while owning gold.”
Nexo co-founder Kosta Kantchev commented:
“Gold bugs proliferate the crypto community, and the Nexo-Paxos offering now enables them to do what until now was only available to high-net-worth individuals via Lombard credits on large quantities of physical gold – accessing the value of gold without selling it.”
He went on to say that using physical gold as collateral for credit lines is something that the ultra-wealthy has been doing for centuries already. The collaboration between the two companies now enables everyday people to do the same, whether they choose to use the funds to buy more gold or access other asset classes.
Allowing for fractional ownership of gold
Another advantage of tokenising gold is that it allows for fractional ownership. For as little as a few hundred dollars, people can invest in gold and instantly unlock its worth. They can make their investments work for them rather than working for their money – something that the ultra-rich has also been doing for generations.
According to the press release: “Nexo accepting the digital representation of gold as collateral makes what was previously reserved for the privileged few available en mass to all.”
The possibilities of tokenisation are almost infinite. The tokenising of gold is just the start of a larger movement that will eventually see all asset classes moved over to the blockchain. This will allow people to exchange, trade, and unlock value quicker – from different types of commodities to stocks and bonds.
“Apart from unlocking the value of previously idle assets such as Picassos and Monets, the tokenisation of the world enables large-scale fractional ownership. This, in turn, ensures social inclusion and participation in Western-like wealth creation to even the remotest corners of the world.”
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.