What is Paxos Gold (PAXG)?
Paxos Gold (PAXG) is a cryptoactive backed by real gold reserves held by Paxos, a for-profit company based in New York.
Each PAXG token is redeemable for 1 troy fine ounce of gold held in vaults by Paxos and its partners, and its market value must reflect the physical gold it represents.
Paxos developed PAXG as a token in the Ethereum blockchain, which means it can be exchanged for other cryptoactives and protected by owners using cryptographic keys.
To ensure the ongoing maintenance of its reserves, Paxos undergoes monthly audits to certify that the supply of PAXG tokens matches the amount of gold it holds.
Users can also redeem PAXG for gold bars at any time if they wish.
Importantly, PAXG tokens are divisible into up to 18 decimal places and smaller amounts of gold can be redeemed through a network of physical gold retailers around the world.
Who Created Paxos Gold?
Founded in 2012 by Charles Cascarilla and Rich Teo, Paxos is a startup specializing in building infrastructure for cryptocurrency exchange.
In 2018, Paxos launched the Paxos Standard (PAX), a cryptographic asset backed at 1:1 with a reserve of US dollars stored by Paxos in US bank accounts. Paxos Gold was released in 2019.
PAXG is now backed by gold, secured in Brinks vaults and held in escrow through the Paxos Trust Company.
Why Does Paxos Gold (PAXG) Have Value?
PAXG derives its value from its ability to allow cryptocurrency investors to move the value into an asset offering exposure to the price of gold.
These investors may be attracted by the idea that they can retain value in an asset whose long-term value they believe in, while enjoying the properties of virtual money, including easy online exchange, portability and exchangeability.
How Does Paxos Gold Work?
Paxos Gold runs on the Ethereum blockchain and its transactions operate according to the smart contract rules established by that network.
The company charges a small fee for the creation and destruction of PAXG tokens (about 0,02%). There are also connection fees that users pay to move tokens on Ethereum.
Notably, Paxos monitors and supervises all PAXG transactions using third-party analytical tools. This is done in an attempt to investigate possible cases of fraud and money laundering.
Finally, there are also regular smart contract audits, where developers examine code to identify bugs and vulnerabilities.
Why Use Paxos Gold (PAXG)?
Os users may find PAXG an attractive addition to their portfolio because it offers the efficiency and transparency of cryptocurrency, while offering exposure to price movements in the gold market.
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