PAXG (Pax Gold) is a gold-backed cryptocurrency issued by Paxos Trust Company. Each PAXG token represents one ounce of a London Good Delivery gold bar stored in professional vaults. Launched in September 2019, PAXG operates on the Ethereum blockchain as an ERC-20 token, combining the stability of physical gold with the flexibility of cryptocurrencies.
How PAXG Works
PAXG’s value is directly tied to the market price of physical gold. Each token corresponds to one ounce of gold held in Brink’s vaults in London, with Paxos Trust Company acting as the custodian. Users can verify their PAXG holdings via Ethereum wallets, accessing details like serial numbers and physical characteristics of the allocated gold bars.
Key features:
- Instant transactions: No lengthy settlement processes typical of traditional gold trading.
- Flexible redemptions: Convertible to physical gold, fiat, or other digital assets.
- Monthly audits: Third-party verified to ensure 1:1 reserve backing.
Advantages vs. Limitations
Pros:
✅ Lower investment threshold: Buy fractional gold without storage/transport costs.
✅ DeFi integration: Use PAXG for staking, lending, or yield farming.
✅ Global liquidity: Trade gold seamlessly across borders.
Cons:
⚠️ High redemption minimum: Requires 430 PAXG (~430 oz gold) for physical withdrawal.
⚠️ Security risks: Exposure to wallet/exchange breaches despite blockchain security.
Use Cases for PAXG
- Digital gold investing: Hedge against market volatility.
- DeFi collateral: Earn interest via lending protocols.
- Cross-border transactions: Transfer gold ownership without logistics.
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FAQ
Q: Is PAXG a stablecoin?
A: No—its value fluctuates with gold prices, unlike fiat-pegged stablecoins.
Q: Can I store PAXG in any wallet?
A: Yes, any ERC-20 compatible wallet (e.g., MetaMask).
Q: How is PAXG taxed?
A: Treated as physical gold in many jurisdictions; consult a tax advisor.
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Disclaimer: This content is for educational purposes only. Perform your own research before investing.