People have historically viewed gold as a stable investment, but owning it poses its own host of challenges. You must find a way to securely store it, and there are frequently strict paperwork requirements to buy or sell it. Many cryptocurrencies aim to overcome these challenges while benefiting from the stability of gold. Of those gold-backed cryptos, do any let you exchange your crypto for physical gold? The short answer is yes. Let’s take a look.
Why Redeemable Gold-Backed Cryptocurrencies?
Before looking into some of the cryptocurrencies that you can exchange for physical gold, it is wise to review why you may want to do this. The desire to redeem crypto for gold comes down to the historical stability of gold, combined with the volatility of cryptocurrency. At some point, you may decide that you do not need the anonymity or versatility of the cryptocurrency and would prefer the physical gold.
Additionally, being able to redeem cryptocurrency for gold essentially gives you another payment option when you choose to sell it. Instead of selling the crypto for fiat, you would be selling it for gold. Importantly, the exchange rate between the token and the gold would be well-known and stable, unlike the exchange rate with fiat, which tends to be volatile.
Even if you are unlikely to ever redeem the cryptocurrency for gold, many people appreciate having the option.
GoldCoin is an ERC-20 token on the Ethereum network. GoldCoin.com allows for anonymous, secure, and instant purchases of the coin, entitling you to the gold that backs it.
Most people who own this gold-backed cryptocurrency will keep it for its stability and let the project take care of storing it in its own secure vault. However, if you want to redeem your tokens for physical gold, the project lets you do so.
Every 1,000 GoldCoins (GOLD) are the equivalent of an ounce of gold. So, to get an ounce of gold, you would have to redeem 1,000 GOLD. Because you need a thousand tokens to get a full ounce, the token is fractionalized, a feature that none of the other cryptos you can exchange for gold share with it. That fractionalization makes this particular token much more accessible, as it essentially divides the price of an ounce of gold by 1,000. By comparison, the other cryptocurrencies on this list require a larger initial investment.
As mentioned, GoldCoin is the only fractionalized cryptocurrency that you can exchange for physical gold. However, there are other types of tokens that you can redeem for gold. They just require larger initial investments, so they are less accessible. Here are some of those coins.
DigixGlobal is based in Singapore, and every DGX token represents a gram of gold, which the company stores in secure vaults in Singapore and Canada. The vaults are fully insured and accredited by the Bullion Association.
As each DGX token represents a gram, each token costs significantly less than a heavy gold bar would. Even so, the barrier to entry is much higher than for GoldCoin. To further complicate matters, you must pay an exchange fee of 1 percent when you redeem DGX for physical gold.
PAXG tokens or Pax Gold are each backed by a single fine troy ounce of a 400-ounce London Good Delivery bar. Those bars are in Paxos’s custody, but the token holder has full rights of ownership. You can redeem the tokens from London Good Delivery bars of gold that are LBMA-accredited.
Of course, given that you would redeem PAXG for a gold bar, the barrier to entry is somewhat high due to the weight and value of the gold bars.
Perth Mint Gold Token
The Perth Mint of the Western Australian government backs the Perth Mint Gold Token (PMGT). The government also guarantees the weight and purity of the gold, while the GoldPass app issues digital gold certificates. The certificates back PMGT tokens at a 1:1 ratio. There is minimal liquidity, but you can still fully redeem your PMGT holding for physical gold if you wish.
While there are several different cryptocurrencies that you can exchange for physical gold, GoldCoin stands out for its fractionalized nature. This allows for a very low barrier of entry while combining the anonymity and security of most other gold-backed cryptocurrencies.