In the past, when people thought about investing in gold, many would consider buying gold bars from banks or purchasing gold ETFs through brokerage accounts.
However, now on cryptocurrency trading platforms, one can also buy and sell digital assets linked to gold.
Recently, the trading of gold tokens has seen a notable increase in popularity. Market data shows that since the launch of Binance Gold-supported tokens, the cumulative spot trading volume has surpassed 8 billion dollars. Even excluding the trading peak early after launch, the trading volume over the past week has still exceeded 325 million dollars. On November 5, the daily trading volume reached 78 million dollars.
While the trading heat in the cryptocurrency market has cooled down, gold-related tokens are becoming increasingly active. More and more cryptocurrency users are beginning to pay attention to gold, giving this traditional asset a new way to trade.
Gold can already be bought in the form of gold bars or gold ETFs, so why move it onto the blockchain? What distinguishes gold tokens from the gold investments we are familiar with?
1. Can gold also become a digital asset? First, let's understand XAUT and PAXG
First, a simple concept: gold tokens are assets that are backed by physical gold, converting gold-related rights into blockchain tokens.
The two most representative products currently are:
- XAUT (Tether Gold): Issued by a relevant institution under Tether. Tether's most well-known product is USDT, which is the Tether coin.
- PAXG (Pax Gold): Issued by the American fintech company Paxos, which primarily engages in fintech and blockchain infrastructure business.
These two products usually correspond to one troy ounce of physical gold per token, approximately 31.1 grams.
How do they operate?
You can understand the issuer as the manager of the gold: they first prepare the corresponding physical gold, entrust it to a relevant custodian, and then issue a corresponding number of digital tokens.
Users buying XAUT or PAXG acquire the gold-related rights specified in the product terms. The token price mainly follows changes in international gold prices.
For example:
If the international gold price is 4000 dollars per ounce, then a token corresponding to one ounce of gold should theoretically be around 4000 dollars.
If the gold price rises, gold tokens usually will also increase; if the gold price falls, the token price may similarly decline.
However, holding a gold token does not mean one can extract physical gold at any time. Actual convertibility, minimum exchange amounts, and related fees depend on the issuer's specific regulations.
2. What is the difference between gold tokens and buying gold bars or gold ETFs?
Since both are investments in gold, why is there an additional gold token option?
The main differences lie in the trading method and holding method.
For crypto users, the clear advantage of gold tokens is that they do not need to change their existing trading habits much.
For example, if you are already trading BTC and ETH on Binance, if you wish to engage with gold-related assets, you can trade through gold token trading pairs supported by the platform.
Some products can also be transferred on supported blockchain networks, making the holding and transfer methods quite similar to other digital assets.
Of course, there is no absolute superiority or inferiority between gold ETFs and gold tokens. The former are investment tools in traditional financial markets, while the latter bring gold into the blockchain and cryptocurrency trading environment. The choice between the two mainly depends on one's trading habits and actual needs.
3. Why are crypto users starting to pay attention to gold tokens?
The rise in popularity of gold tokens is related to two changes.
First, gold itself is an asset of global interest to investors.
Gold prices are influenced by various factors, including the exchange rate of the dollar, interest rate expectations, inflation, and geopolitical situations.
When volatility in the cryptocurrency market increases, some investors begin to focus on assets beyond Bitcoin, and gold naturally comes into their view.
Recently, gold prices have experienced a significant adjustment, temporarily falling to around 4000 dollars per ounce, yet trading in gold-related tokens remains active.
This indicates that market attention to gold does not entirely depend on short-term price fluctuations.
Second, cryptocurrency platforms provide an additional option for gold trading.
In the past, investing in gold typically required going through banks, jewelry stores, or securities markets. Now, gold tokens allow users to buy and sell gold-related assets on cryptocurrency trading platforms.
For those already familiar with trading digital assets, there is no need to readjust to a completely different trading environment to access the gold market.
From the perspective of market size, as of around November 10, public market statistics indicate that the total market capitalization of tokenized gold is about 5.7 billion dollars, with XAUT and PAXG holding the majority share.
However, this scale is still very small compared to the traditional gold market.
It is also essential to distinguish between two concepts: 8 billion dollars is the cumulative trading volume and does not represent 8 billion dollars in new capital flowing into the gold market. The same capital might undergo multiple trades, so trading volume mainly reflects the level of trading activity and cannot be directly regarded as a sustained bullish signal for capital.
Finally: Gold is entering the view of cryptocurrency traders
From gold bars and gold ETFs to today's gold tokens, the trading methods for gold are becoming more diverse.
For those used to using cryptocurrency trading platforms, products like XAUT and PAXG offer a new entry point into the gold market. Besides BTC, ETH, and other digital assets, users can also understand and trade assets linked to physical gold through platforms that support gold tokens.
Currently, Binance supports trading in related gold tokens. Interested users can visit the platform to check specific trading pairs, real-time market data, and trading rules to further understand these assets.
If you haven't registered a Binance account yet, you can complete the registration through the link below:
https://jump.do/zh-Hans/xlink-proxy?id=3
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Risk Warning: Gold tokens do not equal directly holding physical gold; their prices will fluctuate with international gold prices and may also be affected by market liquidity and bid-ask spreads. Before investing, it is essential to understand the product mechanisms and platform rules thoroughly, make cautious decisions based on one's risk tolerance, and avoid blindly chasing highs. This article is for the sharing of market information and product knowledge and does not constitute any investment advice.
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