Paxos, the operators of the ItBit cryptocurrency exchange and issuers of the Paxos Standard PAX, -0.10% stablecoin, are working on a gold-backed cryptocurrency as well as tokens backed by other precious metals and securities such as stocks. Paxos CEO Chad Cascarilla recently appeared on Fortune’s Balancing the Ledger show, and said that the gold-backed token is likely to be launched in 2019.
The company is in a unique position to potentially offer tokenized securities, since it has an account at the Depository Trust Company, which, as of July 2017, custodied $54.2 trillion worth of securities.
Cascarilla explained that tokenizing commodities such as precious metals simplifies processes and opens up new option. For example, it makes it much easier to own and trade smaller denominations of gold and simplifies lending:
“We’ve been in the precious metals space now for over three years, trying to think about how tokenizing commodities and tokenizing precious metals can change the way in which a physical asset is able to be moved in a digital way on a blockchain. Some of the problems in the physical asset space is how can you make it divisible, how can you make it more transportable, how can you be able to more efficiently lend it out, and how can you do it in a way that you know you own it.”
Tokenized gold is already here
Even though Paxos can provide some advantages over other issuers as a regulated trust company, projects have already successfully launched tokenized gold. The Digix project issues Digix Gold Token DGX, 1.11%, a gold-backed token. 1 DGX represents 1 gram of gold, and there are currently 4,650 DGX tokens on the market, currently trading at 0.3475 Ethereum ETH, -4.14%. The gold backing the DGX tokens is stored in The Safe House in Singapore.