Bitcoin has come to be known as “digital gold” for having many properties similar to that of the yellow metal. Now, Bitcoin’s underlying technology is being adopted by the Royal Mint— Britain’s coin maker to enable trading. Unlike Bitcoin, gold is a physical asset and not so easily divisible when it comes to smaller values. Imagine carrying out transactions with minute quantities of gold for daily expenses, got the idea?
By tokenizing the precious metal using blockchain assets, it is quite possible to indirectly use gold for transactions, just like Bitcoin or any other cryptocurrency. Now, the same principle is being applied by the Royal Mint in association with a US based derivatives trading platform, CME Group. The concept sounds similar to few existing gold-backed DAO cryptocurrency platforms. However, this time it is being created by one of the trusted institutions of Her Majesty’s government.
The tokens which will be known as Royal Mint Gold or RMG will be made available along with the trading platform sometime in the year 2017. The main intention behind this initiative is to cut the costs involved in gold trading, reports one of the business news outlets. Each RMG issued by the Royal Mint will be equivalent to the value of 1 gram of gold and the blockchain based platform will be keeping a record of all transactions made using the gold backed crypto token.
The physical asset backing for RMG comes in the form of gold bullion which will be stored in the secure vaults of Royal Mint. Trading RMGs for individuals and institutions will be similar to trading any other cryptocurrency and they can do so at any time, throughout the year. Also, the management fees and storage charges associated with RMGs are far lesser than traditional gold trading methods, which also encourages more people to start trading gold.
Next year, the Royal Mint will be issuing up to $1 billion worth of RMGs with an option to issue more in the near future based on the demand. Over time, we may see the emergence of crypto assets backed by other commodities as well.
Ref: Business Insider | Image: Royal Mint