PAXG, Explained
Dive into what PAXG (Pax Gold) is, its history, and what makes it a unique cryptocurrency and commodity.
What is PAXG?
Simply, PAXG is a gold-backed stablecoin, bridging cryptocurrencies and commodities. Each token represents one fine troy ounce of a London Good Delivery gold bar, stored in professional vault facilities.
In other words, PAXG allows you to buy, sell, and transfer gold as easily as sending a text with the security and value of physical gold bars.
PAXG operates on the trusted Ethereum blockchain. Anyone who owns PAXG has ownership rights to that gold under the custody of Paxos Trust Company, a regulated financial institution. By tokenizing physical gold, PAXG makes precious metals investing more accessible, liquid, and efficient than traditional methods.
The history of PAXG
PAXG was created by Paxos, a blockchain infrastructure company founded in 2012. The company had already established itself in the regulated stablecoin space with the launch of Paxos Standard (PAX) in 2018, a dollar-backed cryptocurrency that demonstrated their expertise in asset-backed digital tokens.
PAXG was then launched in 2019. The company utilised its regulatory standing and experience with asset-backed tokens to ensure institutional-grade custody and compliance standards.
Since its introduction, PAXG has found adoption among both retail investors seeking fractional gold exposure and institutions furthering their gold investments. The token is now backed by gold secured in Brinks vaults and held in custody through the Paxos Trust Company, providing the infrastructure for a regulated, audited, gold-backed cryptocurrency that bridges traditional precious metals investing with modern digital finance.
Key features of PAXG
PAXG offers several distinctive features that set it apart in both cryptocurrency and precious metals markets:
Real Gold Backing: Each PAXG token is backed by one fine troy ounce of gold stored in professional vault facilities. This gold is held in Brinks vaults and custodied through Paxos Trust Company, ensuring institutional-grade security and storage standards for the underlying assets.
Physical Redemption: Unlike gold ETFs or other gold-tracking investments, PAXG tokens can be redeemed for physical gold bullion bars. For smaller amounts, redemption is available through a network of physical gold retailers worldwide, making the token genuinely convertible to physical precious metals.
Fractional and Global Ownership: PAXG tokens are divisible up to 18 decimal places, allowing investors to purchase fractions of gold that would be impossible with traditional gold investing, hence making gold accessible to smaller-scale investors globally.
Regulatory Compliance: Paxos operates as a regulated trust company, providing institutional-grade compliance and oversight. The company conducts monthly audits to ensure the PAXG token supply matches gold reserves, and monitors all transactions using analytical tools to prevent fraud and money laundering.
Ethereum Integration: As an ERC-20 token, PAXG benefits from Ethereum's established infrastructure, allowing it to be traded on cryptocurrency exchanges, stored in standard wallets, and potentially integrated with DeFi protocols while maintaining its gold backing.
Transparency and Auditing: Regular audits verify that PAXG token supply matches gold reserves, with smart contract audits ensuring the underlying technology remains secure. This transparency provides investors with confidence in the token's backing and operational integrity.
