The delivery of physical gold may soon be safer thanks to a company that intends to use blockchain – the technology that powers the cryptocurrencies operations. Emergent Technology Holdings wants to use the platform in securing gold transactions.
Blockchain ledgers are like online journals that can’t be tampered with. Once something has been written on a blockchain ledger, the information stored remains available for public viewing forever.
By digitally encoding gold in blockchains, private holders and central banks will be able to account for each ounce of the metal throughout the delivery. Blockchains Expert claims that this could upend the current banking system since banks are traditionally the gatekeepers to these ledgers. The technology allows both parties in the transaction to update the data in the ledger without the need for a middleman.
Gold is one of the most important and expensive resources on Earth that has both trade and intrinsic value. Currently, FXCM details that an ounce of gold fluctuates at around $1,228 (€1,050 or £931). At the minute, central banks use a “trust” system whenever they allow foreign central banks to store gold. However, this isn’t a very reliable method for storing the precious metal. This issue was highlighted when Germany’s central bank wasn’t able to repatriate some of its precious metals from the US immediately in 2013.
With blockchain technology, storing and tracking the movement of gold should be better and more secure. If Emergent Technology becomes successful in using blockchain in digitally encoding gold delivery, the trust system may be rendered obsolete in the near future.
This isn’t the first time that a company hoped to use blockchain in track gold. Emergent Technology said, however, that their approach is “fundamentally different” because their mission is to track “responsibly-sourced gold.”
“Emergent is looking to build an ecosystem,” said Emergent Technology’s Chief Commercial Officer Mitchell Davis. By tracking responsibly sourced gold from mining operations, the company hopes to “connect all steps in the supply chain.”
Apart from digitalising gold deliveries, Emergent Technology formed a partnership with Yamana Gold to create G-coins – a cryptocurrency backed by gold. According to their plans, one G-coin will be pegged to one gram of gold’s spot price. As a blockchain-based investment, G-coins will act as digital certificates that can be used for diversifying investment portfolios or payment.
By creating a digital token that is fully backed by gold, Emergent Technology hopes for a more liquid market for trading the metal. The cryptocurrency market is one of the most popular industries today. Bitcoin, for instance, is often compared to gold as a safe haven investment. Although naysayers have a very different opinion, combining gold with digital coins is still predicted to attract even veteran investors.