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What is PAX Gold (PAXG)? A Complete Guide

What is PAX Gold (PAXG) A Complete Guide

Introduction

PAXG. Today’s investors are at a crucial turning point. Investors are torn between cryptocurrency and more conventional assets like commodities and stocks as a result of the fight between the DeFi and TradFi camps.

Investors who have a more conventional view of the market point to the long history and continued value of commodities like gold as evidence for this theory.

Blockchain advocates, on the other hand, say digital currencies are the wave of the future and the natural progression of financial networks. PAXG is a hybrid product that bridges the gaps between these competing perspectives and ideas.

Just what is PAX Gold (PAXG)?

PAX Gold, often known as PAXG, is a token that symbolizes a claim on physical gold stored in a Brink’s safe. Standardized gold bars are given by London Good Delivery Services, which works with the Bank of England, gold mines, stock exchanges, and other key gold traders throughout the world to provide the country’s gold reserves.

Nearly 400 troy ounces of pure gold are contained in each London Good Delivery Bar. One PAXG token is equivalent to one troy ounce of gold in terms of both value and ownership. One ounce of gold (in troy units) is about 31.1035 grams.

There are at least 999.0 parts pure gold in every thousand London Good Delivery Bars. The PAXG token’s worth isn’t based on market speculation or the token’s inherent utility like other cryptocurrencies. Having PAXG in your possession is the same as having physical gold.

Additionally, users can keep ownership using PAXG tokens instead of purchasing the gold directly, with the same swift and simple transfer options.

The First Appearance of PAXG

The Paxos Trust Company is the entity responsible for establishing PAXG as a Trust. The New York City-based bank that dabbles in technology is an innovator in both fields. To facilitate transactions, PAX Gold was developed as a blockchain. CEO Charles Cascarilla and CFO Richard Teo started the company.

The company’s founders met while working at Cedar Hill Capital Partners and Goldman Sachs, respectively. In 2012, Cascarilla and Teo established the Paxos Trust.

The company has launched more cryptocurrency initiatives in addition to the PAXG coin. PAX Dollar, often known as USDP, is another important product created by the same company.

Paxos received a very positive response from many different businesses, and was able to raise almost $500 million throughout the funding events. Mithril Partners, PayPal, and OakHS/FT are just a few of Paxos’s prominent investors.

PAXG: How Does It Actually Function?

There is currently no in-house blockchain for PAXG. The Ethereum platform was used to launch the initiative. Since PAXG is an ERC20 token, it can be stored and traded in a wide variety of places online, including cryptocurrency exchanges and decentralized exchanges.

Owners of PAXG not only profit from the rising value of gold on global markets, but also from staking and redeeming their tokens for physical gold. Paxos Trust owns all the physical gold coins and bullion that are used to back PAXG. Additionally, the London Bullion Market Association has verified the authenticity of these gold bars.

PAXG’s value is tied to gold and is backed by reserves in an identical 1:1 ratio. Therefore, the token’s circularity supply fluctuates often as it is tied to the influx and outflow of new investors and the PAXG gold reserves.

Unlike with other cryptocurrencies, investors in PAXG don’t have to worry about physically storing any gold they buy. Those that purchase PAXG tokens are essentially buying gold. Users can buy gold in smaller increments, making it suitable for cost-averaging and other trading tactics.

Using PAXG lookup and their Ethereum wallet address, gold bar owners can verify the gold’s physical attributes and serial number.

PAXG, it has been shown, is not the native coin of any one particular blockchain. The Ethereum blockchain will serve as the token project’s host. There can be many distributed applications hosted on the Ethereum blockchain.

Although ETH is Ethereum’s “native token,” PAXG is just one of many tokenization efforts already active on the Ethereum network. To be eligible for a verified project on Ethereum, like the ERC20 token standard, developers must first meet the DeFi standards. The PAXG coin abides by the ERC20 protocol specification.

Therefore, it provides a number of advantages for the investors, such as high interoperability with a variety of alternative cryptocurrency platforms.

Distinctive Features of PAX Gold Compared to Other Gold ETFs

Unfortunately, PAXG has characteristics with both Gold ETF and Paxos Token, making it difficult to tell them apart. There are, however, significant distinctions between the two alternatives presented below:

Balance Sheet Caps

PAXG’s gold reserves are valued and confirmed by industry experts at Brink. Customers can always log in to their Paxos account and inspect their gold bar’s serial number and verify its physical attributes.

However, investors in Gold ETFs do not acquire legal title to physical gold. Exchange-Traded Funds (ETFs) are similar to mutual funds in that they solely reflect the value of a single asset, in this case gold, on the international or national market.

Denomination

Holding PAXG gives you legal title to physical gold. For all intents and purposes, the PAXG token is just a digital and cryptographic representation of the physical gold transaction. In contrast, Gold ETFs solely follow the commodity’s spot price or value.

Availability

PAXG is an ERC20 token that can be found on the Ethereum network. Gold exchange-traded funds, meanwhile, are gold-backed paper contracts traded on a stock or derivatives exchange.

Further, gold ETFs are subject to oversight from financial regulators including the United States’ Commodity and Futures Trading Commission.

Utility

PAXG facilitates internet shopping for investors in various industries. On the other hand, the token can be staked, borrowed, redeemed, and traded. Gold exchange-traded funds, on the other hand, serve primarily as a means to an end, namely, the withdrawal of cash.

The way PAXG generates income.

Investors should consider a cryptocurrency project’s revenue model before committing funds to it. Insight into a company’s reliability and success can be gained by investigating its business model.

Paxos Trust’s PAXG generates income through a premium in lieu of gold reserves. As a second source of revenue, PAXG will impose a tokenization fee on the initial purchasers of its token.

The PAXG purchase quantity is a key factor in determining the tokenization charge. Customers who buy less than an ounce of gold each transaction will be charged a one percent fee.

It is worth noting that Paxos does not levy any custodial fees on its investor clients. However, users must pay a transaction fee of 0.02% each time they buy or sell digital money on a distributed ledger.

The Best Ways to Make Money With PAX Gold.

Since it has been established that PAXG is a legitimate endeavor, the next logical inquiry is how one may profit from it. The first choice is to hold the PAXG token, which will increase in value in tandem with rising gold prices.

However, PAXG holders have another option: they can stake their tokens to gain access to a pool of funds yielding interest. PAXG token holders can earn interest by pledging their tokens to many custodian providers. Yet, interest rates differ from one investor to the next.

If you’re an investor seeking to buy PAXG, you may do it on any of the major cryptocurrency exchanges in the region, including Kraken, Coinbase, Binance, KuCoin, and others. Investors should be aware that staking their tokens means they cannot use them for anything else during the waiting time.

Investors need to sign up for a brand new account with any regional cryptocurrency exchange (e.g., Coinbase) in order to buy PAXG tokens. Take the cost of Ethereum transactions into account.

Get some Ether (ETH) currency from a vendor or move some between electronic wallets. They can now purchase freshly issued PAXG tokens with ETH via Coinbase or any other exchange listing PAXG.

Important PAXG Characteristics

Goodwill

The reputation of a cryptocurrency project is crucial to its success. There is a close relationship between the Paxos Trust and the New York State Department of Financial Services (NYDFS).

Even better, it removes the crucial obstacle that had been standing in the way of investors trying to decide between traditional and cutting-edge investment strategies. Buying PAXG is just like buying gold, and it can be found at the safest and most reliable storage facilities around the globe.

Reports on the market supply of PAXG tokens and the proportions of underlying gold reserves are audited and published by a national auditor.

Accessibility

PAXG tokens, unlike physical gold, can instantly be transferred digitally throughout the globe. You shouldn’t worry about hackers or other nefarious parties messing with the cash because it’s completely protected. It’s a safe and reliable way to invest in gold from a reputable provider like LBMA.

Redeemable

As a store of wealth that is always in demand, gold has widespread acceptance and trust as a store of value around the globe. It is important to note that PAXG is the only cryptocurrency that is linked to the LBMA gold reserve, which is the standard for such a link.

Additionally, investors can buy a far smaller amount of gold than they could with physical gold. Consumers can get US dollars in return for their PAXG tokens. Members of the PAXG community can convert their PAXG holdings to Loco London Gold.

Small Costs per Transfer

PAXG coins also stand out because of the minimal transaction fees they impose. It’s possible to pay anywhere from 0.03% to 1% of the transaction’s total value, with the exact amount depending on the volume. Using the Paxos central wallet, PAXG tokens are created or redeemed at a volume between and including these values.

But Paxos doesn’t tack on any fees to store your actual gold or PAXG tokens. As an added bonus, the token’s transaction fees on Ethereum average just 0.02%. Tokens issued by PAXG adhere to the same low gas charge structure as other ERC20 tokens.

Flexibility

Liquidity is a key feature of a successful cryptocurrency. Investors in PAXG can buy, sell, and swap their tokens on all of the major cryptocurrency exchanges. PAXG tokens can be converted to other cryptocurrencies or unallocated gold through the Paxos platform.

PAXG can be bought, sold, and used on any platform that supports the ERC20 token standard. All major cryptocurrency exchanges support PAXG tokens, so investors can trade them for any cryptocurrency.

The Benefits of PAX Gold

solid groundwork

Known and trusted individuals established Paxos Trust Company. As a result, customers need not worry about being taken advantage of financially or losing faith in the organization.

Additionally, the Paxos Trust is developing a new Paxos Standard-based stablecoin. Simultaneously, a new partnership has formed with Huobi in exchange for Huobi’s HUSD stablecoin.

The Concept of Collateralized Tokens

Paxos Trust Company ensures that there is a constant one-to-one ratio between the reserves in Brink’s vault and the PAXG circulating supply. The firm also publishes updates on the most recent adjustments on a regular basis and uses a regulatory audit to assure compliance.

Simple Obtainability

When it comes to purchasing PAXG, the bare minimum is really low. Thus, anyone, from wherever in the globe, may buy the token and take pride in owning a little fraction of actual gold.

Coincidentally, PAXG tokens can be purchased at prices that are reasonable and appropriate for individual retail investors.

Gains from Interest Bearing Investments

Crypto.com and NEXO are two exchanges that let you open an interest account specifically for PAXG, and so earn interest on your PAXG holdings.

Also, NEXO is just one example of a DeFi platform that enables investors to access short- and medium-term loans secured by PAXG.

Gold Purchases on a Small Scale

Many people lack the resources to buy substantial quantities of gold and lack a dependable method of determining the gold’s purity and value. However, it is not possible for the average investor to safely keep their gold.

Buying PAXG is a one-stop-shop solution to all of their issues. Gold tokens allow investors to easily and cheaply acquire physical gold. Currently, 0.01 PAXG, or about $19, is the lowest amount that may be spent on PAXG.

Enterprise Subject to Restrictions

The PAXG token also benefits from being issued by a regulated company. New York State Department of Financial Services rules over Paxos Trust Company. Also, for the benefit of its shareholders, the corporation posts its most recent audit reports, documentation of regulatory compliance, and other significant information on its website.

In addition, national auditing authorities conduct financial audits of the PAXG’s physical gold reserve.

PAXG’s Weaknesses

Auditing Your Account

Notably, PAXG investors must have verified accounts. This means that buyers of PAXG will need to register a verified account after passing the Know Your Customer (KYC) checks.

Since this is the case, several cryptocurrency traders and DeFi advocates worry that PAXG KYC rules may invade their privacy.

Decentralization

PAXG is a decentralized coin by design, hence state-issued financial regulatory requirements cannot be applied to the project.

As a result, PAXG users have no say over whether or not their accounts are frozen, thawed, or deleted.

Instantaneous Purchase at the Current Market Price

Investors can buy PAXG tokens at the current spot price on the Paxos website. To purchase PAX Gold, go to the PAX Gold tab or utilize the BUY button. There is a choice to swap US dollars for Paxos.

Users of the Paxos platform, however, should bear in mind that investors must take creation fees into account. The Quote Preview box provides customers with real-time access to the percentage of the creation fee that will be charged.

Buying It Myself

Using the User Interface on the Paxos official site, crypto investors can trade PAXG for USD or unallocated gold.

Golden Coins That Have Yet to Be Assigned

People who have an account with Loco London can move their unused gold to Paxos. It is the Paxos Trust Company’s intention to tokenize and subsequently transform this gold reserve into individually numbered gold bars.

Afterward, these tokens are distributed to users’ Paxos accounts. As soon as the deal closes, the Paxos Trust will begin converting all of the unallocated gold in your Loco London account at the UK cut-off time.

Conclusion

The number of bitcoin implementations now in circulation is in the thousands. That’s why it’s impossible for investors to make informed decisions about their portfolios.

However, many investors are still wary of putting their money into innovative financial products like cryptocurrency. Investors who want to reap the benefits of cryptocurrency trading while also benefiting from the security of commodities like gold will find PAXG to be a perfect platform.

Orizu Augustine
Orizu Augustine is an experienced crypto writer working for Alltechcraft. Having passion for writing, he covers news articles from blockchain to cryptocurrency and iPhone and Samsung related articles.