What is PAX Gold (PAXG) and how does it work?

In recent years, nonfungible tokens (NFTs), cryptocurrencies and other modern investment options have become trendy. However, physical commodities such as gold are still in high demand. In 2021, the global market capitalization for cryptocurrency surpassed $2 trillion. Now, investors must ask themselves: which option should I choose — crypto or gold?

Gold is a commodity that dates back thousands of years as a store of value and as a means of exchange and is still successful today. Even with the invention of decentralized digital cryptocurrency, gold has remained just as prominent. Although, for most individual investors, owning gold can be difficult and out of reach. There is one crypto company, PAX Gold (PAXG), whose goal is to make gold ownership more democratic and available to everyday investors by allowing them to trade it like any other cryptocurrency.

PAX Gold has discovered a method to combine cryptocurrency with physical gold assets, making it attractive to investors accustomed to conventional alternatives. This article will discuss PAX Gold (PAXG) and analyze how the cryptocurrency works.

What Is PAX Gold?

Paxos Gold is a cryptocurrency that is backed by real gold reserves held by Paxos, a for-profit company in New York. Each PAXG token is linked to a 1:1 ratio to one troy ounce (t oz) of a 400-ounce London Good Delivery gold bar stored at Brinks Security vaults in London. The Paxos-backed cryptocurrency, PAXG, is backed by the London Bullion Market Association (LBMA) certified gold bars and may be redeemed for actual bullion.

PAX Gold investors are spared the trouble of storing and securing physical gold, as well as transporting it. Also, shares can be bought fractionally, which makes it more accessible for retail investors who otherwise would be hindered by the high cost of gold. PAX Gold boasts a combination of qualities from both physical gold ownership and cryptocurrency that provide solutions to many modern-day challenges in the gold market such as high costs, storage concerns and the lack of liquidity.

Who Is Behind PAX Gold?

The Paxos Trust Company, a financial institution and tech company based in New York City that specializes in blockchain technology, created PAX Gold. Charles Cascarilla and Richard Teo, both former analysts at different firms (Cascarilla at Goldman Sachs and Teo at Cedar Hill Capital Partners), founded Paxos in 2012.

PAX Gold is not the only crypto project that Paxos has undertaken. In addition to PAX Gold, they have also created PAX Dollar (USDP), a digital United States dollar and stablecoin. They have received strong institutional support and have raised over $500 million in total funding from investors like OakHC/FT, Mithril Partners and PayPal Ventures.

How does PAXG work?

The PAX Gold token is built on the Ethereum blockchain, which gives it portability among wallets, exchanges, decentralized finance (DeFi) platforms, and other apps that use Ethereum. PAX Gold allows users to trade, stake or redeem their tokens for high-quality gold bars. These gold bars are accredited by the London Bullion Market Association and stored in secure vaults around the world. Even with these top-notch security measures and high-quality gold, PAX Gold doesn’t charge any custodial or storage fees — only a 0.02% transaction fee.

Is Pax Gold safe? PAX Gold is not only accredited with a gold standard, but it also functions dependably and transparently. Both PAX Gold and its holding company, Paxos Trust, are under the legal jurisdiction of the New York Department of Financial Services (NYDFS). Furthermore, PAX Gold protects the consumer and the company’s assets independently, ensuring that the consumer is secure in the event of bankruptcy.

PAXG undergoes monthly audits from a third-party auditing firm to ensure that its gold reserves match the supply of PAXG tokens. The reports from these attestations are released on Paxos’ official website. In…