Coingape - 9/6/2019 3:47:07 AM - GMT (+0 )
In an interview with Joe Kernen of CNBC, Mark Mobius suggested that Crypto must be backed by Gold for it to have an intrinsic value. In a surprising co-incident, Paxos announced the launch of its regulated Gold-backed cryptocurrency on the same day.
The fund manager and founder of Mobius Capital was skeptical about the entire blockchain system standing on its own. His understanding of the system came about quite like someone who has been newly introduced to the system. He said,
If there is a cryptocurrency that is really backed by Gold — and that is, there is a meaningful agreement and some kind of modern thing of this connection — then this could be quite interesting.
He also warned the people that somewhere in the future, Blockchain could be hacked as well. Bitcoin and Crypto would than face an existential crisis. Nevertheless, until that happens, trust in Bitcoin seems to be growing enormously this year.
Moreover, Kerner also argued that since no FIAT is backed by Gold as well, then that it should extend to Bitcoin as well. Mark conceded to the fact that “faith” is another factor for intrinsic value. He also suggested that Crypto is even driving the price of hard assets such as Gold.
Coincidentally, on the same day, Paxos issued a regulated gold-backed cryptocurrency. It will go live by the end of September 2019. Paxos, formerly known as iBit Company LLC, is a Financial Services company that aims to bridge the gap between traditional assets and cryptocurrencies. It also operates the iBit Exchange which provides an online portal for trading crypto.
The token, PAX GOLD, will represent “one fine troy ounce of London Good Delivery gold stored in vault facilities in London.” The CEO and Co-Founder of Paxos, Charles Cascarilla, told the media,
“If you come to us and you buy one ounce of Gold, you send $1,500 of Paxos tokens, and we give you one ounce. That ounce is actual legal title to an ounce of Gold of a bar in a vault in London,”
His statements were inspired by the criticism that the financial gold market faces. Exchange-traded funds, futures, and Gold that is not allocated to the owner are “synthetic representations.” Moreover, due to the large physical density of Gold, carrying, and storing it is cumbersome.
Paxos has procured trust charter from one of the most stringent regulators in the world the NYDFS (New York State Department of Financial Services) in 2015. The NYDFS also approved a USD backed stablecoin – BUSD that is jointly developed by Binance and Paxos.
Furthermore, Paxos Gold is built on Ethereum to make it easier for implementation with other platforms.
Do you think that cryptocurrency will drive an era of hard assets and obliterate synthetic financial products? Please share your views with us.
Nivesh from Engineering Background is a full-time Crypto Journalist at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com