The blockchain firm, Paxos will be launching its digital token which will be backed by the precious metal, gold. During an interview, Paxos, CEO, Cascarilla was questioned about the working of Paxos on the gold-backed coin, to which he said,
“It is something we will see definitely this year.”
“We are excited about the concept of being able to take a commodity, and I think precious metals are really obvious ones, and gold is probably the most obvious and being able to tokenize it.”
In order to implement the concept, Paxos has to ensure it holds the amount of inventory “in the real world” equal to the one registered on the blockchain. Talking about Paxos Standard (PAX) which is the company’s Ethereum (ETH) based stablecoin backed by the U.S dollar with a ratio of 1:1 and launched in September last year. Cascarilla stated that this stablecoin is different from other stablecoins. The stablecoin is highly regulated, fully audited and completely approved by the New York State Department of Financial Services (NYDFS).
Cascarilla said again,
“In order to put something in a blockchain, you have to make sure you have the right amount of inventory in the real world versus what is in the blockchain. How you do with a gold token is how much gold do you have in a vault equals how many gold tokens outstanding.”
“The status of our firm as a financial institution allows us to utilize the banking system and to make sure that we can hold backing assets in the real world which correspond to the assets running on the blockchain.”
Paxos was founded in the year 2012 as a Bitcoin [BTC] exchange itBit. This start-up was later renamed as a blockchain firm ‘Paxos’. Paxos owns a trust firm charter in New York, which provides it with some of the privileges which are enjoyed by a bank. This includes the ability to take decisions related to mainstream financial assets.
In December ‘18, according to cointelegraph,
“PAX exceeded $5 billion worth of transaction volumes.”
The coin was used in $5,245,958,124.65 USD worth of transactions, with a market cap of nearly $174 million of which the trust firm had redeemed over $136 million USD.