The Perth Mint’s Gold Now Backs a Cryptocurrency on Ethereum

Gold Bullion

Gold-backed cryptocurrencies were again in the headlines last week when Australian fintech company InfiniGold announced the launch of the Perth Mint Gold Token (PMGT).

Developed in collaboration with The Perth Mint—the world’s largest refinery of newly minted gold—PMGT was described by InfiniGold in its press release as an Ethereum-based cryptographic token backed one-to-one by so-called GoldPass certificates issued by The Perth Mint.

Launched in 2018, GoldPass is The Perth Mint’s full-service gold investment app operated and powered by InfiniGold’s proprietary technology. With GoldPass, users can securely buy, store, transfer, and sell physical gold via digital certificates.

All GoldPass digital certificates are fully backed by physical gold securely stored at The Perth Mint. Because The Perth Mint operates under a government guarantee, every ounce of gold it stores is guaranteed by the Government of Western Australia.

Therefore, PMGT is simply a tokenised version of a GoldPass certificate, which itself is a digital representation of physical gold. In other words, a unit of PGMT equals one troy ounce of GoldPass gold certificates, which itself equals one troy ounce of 100 per cent pure physical gold.

So, why tokenise GoldPass certificates and make them available for all to see on the public, permissionless blockchain that is Ethereum? As previously covered by Nugget’s News, tokenised versions of gold and other precious metals offer investors an incredibly cost-effective way to gain exposure to the asset class, all without compromising on security and reliability.

Also, because many of these precious metal-backed cryptocurrencies are developed in compliance with Ethereum’s ERC-20 standard, they can leverage smart contract technology to unlock never-before-seen composability and functionality.

Same Same, But Different

To be sure, PMGT is not the world’s—or indeed Australia’s—first example of a gold-collateralised cryptocurrency. Months ago, Ainslie Wealth launched the Ethereum-based Gold Standard (AUS) token as well a silver-backed equivalent called the Silver Standard (AUG)

Whilst the mechanisms enabling AUS and AUG are incredibly similar to PMGT, an important distinction worth highlighting is the differing ownership structures of the entities responsible for storing the respective cryptocurrencies’ collateral. Whereas Ainslie Wealth is a private Australian company, The Perth Mint—being wholly owned by the Government of Western Australia—is a state government entity.

Although perhaps rather petty at first glance, the difference in these entity types can be worthwhile understanding, particularly in the context of gold confiscation, which to this day—by virtue of Part IV of the Banking Act 1959—can be legally enforced by the Australian government.

Convergence of Cryptocurrency and Gold Continues

The announcement of PGMT’s launch was made just a fortnight out from the Gold & Alternate Investments Conference (October 24–26, 2019). As Australia’s largest gold investment event, the Sydney-based conference and exhibition will this year be one day longer. That’s because attendees are being given the opportunity to learn about the similarities and differences between gold and alternative investible asset classes such as cryptocurrency.
Nugget’s News founder and chief executive Alex Saunders will be among a number of representatives of the cryptocurrency and blockchain ecosystem presenting on this special Gold & Alternative Investments Day. Among the various other esteemed presenters will be Nugget’s News partners Ainslie Wealth (represented by Paul Engeman) and HiveEx (James O’Donoghue).

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