What is PAX Gold?


The advancement of technology in recent years has brought about new investment options such as crypto tokens and NFTs. These digital assets can provide massive benefits to their owners even beyond investments, but traditional commodities like gold continue to be a larger market. This leads investors to choose between crypto and gold. PAX Gold aims to alleviate these concerns from investors and give them the best of both worlds. 

What is PAX (PAXG)?

PAX Gold is an ERC-20 token backed by physical reserves of gold. Every PAXG token is matched by deposits of one troy ounce of a 400-ounce London Good Delivery gold bar. These are maintained in secure vaults like Brink’s in London. The deposits are under the custody of Paxos Trust Company, a private company based in New York. 

Converting gold into crypto reduces the burden on investors. They no longer have to worry about factors such as storage, security and transportation, which can get increasingly complicated the more gold you own. 

Additionally, PAX offers the opportunity for fractional ownership. Retail investors who cannot afford to invest in entire bars of gold can now access this avenue of investment. PAX Gold combines the stability and longevity of gold with the logistical and security benefits of crypto tokens. 

How Does Pax Gold Work?

How Does Pax Gold Work?

PAXG is an ERC-20 token on the Ethereum blockchain. It is thus compatible with Ethereum wallets and can easily be traded on crypto exchanges. It can also be used on dApps and DeFi platforms that support it. 

Unlike storing real bars of gold, PAXG does not involve any storage or custodial fees. It only charges a 0.02% transaction fee, along with Ethereum gas fees. This is much more manageable for individuals who do not want the hassle of all the overheads associated with gold ownership. 

Finally, the system is also designed to protect the user. Paxos Trust Company undergoes monthly audits by third-party auditing firms to ensure its gold reserves match the number of tokens issued. 

This is combined with regular “smart contract audits” to ensure the network does not have any vulnerabilities. In addition, consumer and company assets are protected separately. This ensures that your assets are secure even if the company declares bankruptcy. 

What is PAX Gold Future?

An agreement between two parties to buy or sell an asset at a specified price in the future is known as a futures contract. Just like futures in traditional trading, PAXG futures contracts allow investors to trade futures contracts through digital assets. 

The price of PAXG is pegged to the spot price of gold, as mentioned above. Adding more sophisticated instruments indicates maturity in the crypto market. 

How Do You Invest in PAX Gold?

You can invest in PAXG just like any other crypto token. Most crypto exchanges list PAXG for purchase. Once you create an account with the exchange, you can use USD, EUR, INR or even Bitcoin and Ethereum to buy the tokens you wish. 

To transfer them to other exchanges or Defi applications, you must own a crypto wallet. Connecting your wallet to the exchange and withdrawing PAXG enables you to shift these holdings to another platform easily. 

Final Thoughts

PAX Gold offers a unique investment avenue for crypto users. This is especially true for retail investors who previously could not afford to invest in gold. Paxos’ solution simplifies the process of gold investment and removes complications such as storage and transport costs. It combines the holding power of gold with crypto’s ease of use. 

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Who Founded Paxos?

The Paxos Trust Company is a New York-based financial services company. It was founded in 2012 by Charles Cascarilla and Richard Teo, former analysts at Goldman Sachs and Cedar Hill Capital Partners.

Is Paxos Gold a Stablecoin?

Yes, each PAX Gold token is tied to one troy ounce of a 400-ounce London Good Delivery gold bar. It is thus pegged to the value of gold, unlike other stablecoins that are pegged to fiat currencies like the US dollar.

Is PAX Gold Real Gold?

PAXG is a tokenised representation of gold held in secure reserves. Each token also includes a serial number tied to an individual gold bar. Therefore, it is a digital token equivalent to a certain value of gold.

Is Pax Gold Safe?

Owning PAX Gold is very safe for investors. There are many security measures to ensure users are not misled or lose their invested value. For example, there are monthly audits to ensure the peg to gold is maintained. Additionally, your invested value is secure even if Paxos declares bankruptcy.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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