By
Bhushan Akolkar
April 26th, 2024
Paxos’ stablecoin resembles the service model provided by OneGold, which was founded by precious metals dealer APMEX and alternative asset manager Sprott. It provides clients with an option to digitally hold precious metals.
We have already reported how, when geopolitical situation goes unstable, people tend to invest more in some, more tangible assets. We saw last week how, when Iran attacked U.S. troops in Iraq, the price of oil, gold, palladium and cryptocurrencies soared. Well, now, for the first time, investors can trade gold-backed futures contracts on a leading crypto derivatives exchange.
It all started when, on January 11, cryptocurrency derivatives exchange FTX has launched Bitcoin options trading. This is the seventh biggest crypto asset exchange based on volume, with almost $1.1 billion traded over the last 24 hours.
FTX was established last year and is meant to provide professional derivative trading products, including quarterly and perpetual contracts on various crypto assets, leverage tokens and over-the-counter (OTC) services. The trading platform has also recently seen an investment from major crypto exchange Binance.
Own Your Own Gold Bullion
Be it as it may, by using PAX Gold, a stablecoin backed by gold, FTX now enables traders to buy and sell gold futures contracts with digital assets.
A futures contract is a contract for assets (especially commodities or shares) bought at agreed prices but delivered and paid for later.
The price of PAX Gold is therefore tied to the spot price of one troy ounce of London Good Delivery gold, a standard measure for the London gold market.
By owning PAX Gold, a trader or investor owns also the concealed physical gold stored in London vaults, which is unlike gold futures, exchange-traded funds or unallocated gold.
FTX, therefore, offers much “fancier” trading vehicles for digital assets hoping to build a road for eventual options and leverage trading for PAX Gold.
Paul Ciarvardini, Head of Trading at Paxos said:
“Crypto trading is still a young market. PAX Gold futures on FTX shows how the market is maturing and that it is ready for more complex financial instruments.”
By Gold with Crypto through the Mobile App
In September last year, the Paxos stablecoin operator created a gold-backed ERC-20 token PAX Gold (PAXG) that users can also redeem to actual physical gold.
Paxos CEO Charles Cascarilla then said:
“By releasing a regulated product that makes it easy to own or trade gold, we’re using blockchain technology to democratize access to a multi-trillion-dollar market and bring gold into the digital future.”
FTX itself is operated by Alameda Research, a quantitative trading firm bringing expertise from Wall Street and Silicon Valley to provide liquidity in crypto markets worldwide.
Yesterday we reported of OneGold partnering with BitPay. With OneGold users can buy, sell and redeem precious metals like gold and silver. Now with the help of the BitPay payment service, the company can integrate cryptocurrency payments in their new mobile app and website. They will accept payments in Bitcoin, Ethereum, Bitcoin Cash and a few stablecoins.