At a forum during Binance Blockchain Week, a dialogue between gold advocate Peter Schiff and Binance co-founder Changpeng Zhao highlighted the challenges of verifying physical gold, as Schiff previously failed to confirm whether a gold bar handed to him was genuine.
The crux of the debate is which is more suitable as a store of value asset between tokenized gold or Bitcoin, evaluated across five dimensions: divisibility, portability, verifiability, durability, and supply constraints—key factors in assessing the viability of an asset as currency.
Changpeng Zhao argued that Bitcoin is more suitable as a medium of value storage in several aspects, including the fact that any user can instantly verify this cryptocurrency through full nodes or other methods of checking the encrypted secure public ledger.
Zhao handed Schiff a gold bar and asked, "It says Kyrgyzstan, 1,000 grams, pure gold, 999.9, and has a serial number. Is this real gold?"
"I don't know," Schiff responded, eliciting laughter and applause from the crypto audience. In October, Zhao had criticized tokenized gold, stating that holders must trust the issuer, which also led to this face-off with Schiff on Thursday.
Over the years, the debate between gold advocates and Bitcoin supporters has evolved, with gold proponents like Schiff arguing that tokenization of gold addresses many issues related to portability, divisibility, and verification, while also being applicable in decentralized finance (DeFi) applications.
However, Bitcoin advocates argue that the tokenization of real-world assets (RWA), which represents real-world items on the blockchain, does not resolve the inherent issues of physical gold backing digital gold tokens, including centralization, counterparty risk, and expensive auditing processes.
According to the London Bullion Market Association (LBMA), an international trade association that sets standards for weight, refining, trading, storage, and trusted custody in the industry, there are various recognized methods for assaying gold, which scientifically verify the precious metal content in gold.
These methods include X-ray fluorescence spectroscopy, ultrasound, and eddy current testing, which are costly, require expert involvement, and have limited applicability.
X-ray fluorescence spectroscopy is only effective when the sample metal thickness does not exceed 10 microns, and other methods face similar issues, thus not being "deterministic" testing methods, according to the LBMA. The LBMA noted that only one method can achieve 100% verification certainty.
Fire assay, the process of melting gold to verify its integrity and composition, is the only method that can achieve 100% certainty. However, the LBMA defines it as a "destructive" testing method.
"Currently, there appears to be no recognized non-destructive certainty testing solution, so the best way to mitigate the risk of low-standard assaying remains a well-delivered refinery and custody chain ecosystem," the LBMA stated.
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Original article: “Peter Schiff fails to verify gold bar authenticity in test with CZ”
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