The Case for Tokenization of Gold as NFTS

tokenized gold

When one imagines an NFT, there is a good chance they think it contains art of some kind.  But an NFT can represent any kind of data. Today we want to talk about representing real gold as an NFT. So why would one want to tokenize real gold? What problem does it solve?

As fiat currencies around the world lose value, focus on gold-as-money has intensified. Gold has been considered money since the beginning of civilization.  Central banks and nations around the globe are looking to gold to restore confidence in the monetary system. Gold-backed currencies were challenging in prior eras because settling trade and transactions between countries involved moving large quantities of gold. This was slow, labor intensive and expensive.

By using the blockchain to tokenize gold, the barriers to using gold for exchange of value and store of wealth are largely removed. 

Tokenization of Gold Chart

The stage has been set for a transition to gold-backed currencies that are tokenized and exchanged via the blockchain. Tokenized gold does NOT mean that the physical asset is somehow stored on the blockchain. This is not possible as the blockchain is software code that lives on various computers around the world.

Instead, the property rights associated with owning the asset are represented via the accounting ledger known as the blockchain. This is similar to how the deed to a real estate property represents the ownership rights to that home or building. 

When a person sells tokenized gold, they are transferring the various property rights that are connected to owning the asset. While it is forecasted that eventually ALL assets of value will be tokenized, gold is a very significant asset to look at due to its historical role as money. The blockchain introduces the opportunity to increase transparency around transactions, reduce costs, increase speed and open up markets to new individuals currently not participating. When gold is used as collateral to issue a currency or bonds, third party auditors set up systems to ensure that the gold is actually there. Transparency around those audits is vital to establish and maintain trust. The advantage of using Ravencoin to track physical gold is that anyone with internet access can easily view the latest update on that audit, and to easily view other wallets holding the asset. It offers complete transparency. Ravencoin is a “human readable” blockchain, which means that you see your asset in a human readable form.  This is opposed to all other blockchains which will show said asset as a hexadecimal hash. This makes Ravencoin very user-friendly for both the issuer, and the end user.  To read more about this, check out our Ravencoin 101 page. 

Tokenized gold on the Ravencoin blockchain is an excellent example of how technology can solve a painful and expensive problem. Currently there are a few companies tokenizing gold on the Ravencoin blockchain, but that number is sure to grow as bonds, treasuries and other gold-backed assets are tokenized.  Tokenizing gold on the blockchain is just one example of how many other “real world assets” can benefit from tokenization on the Ravencoin blockchain.

-Written by @Sunnie4mj on Twitter

Tokenized Gold Benefits Image credit: Valhil Advisors

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