The future of trading gold

In recent years, blockchain technology has begun to transform numerous industries, first and foremost the financial industry. Gold trading is no exception. As one of the oldest and safest forms of investment, gold is taking on a whole new dimension through its integration into blockchain ecosystems. Two key developments are driving this change: gold price oracles, which provide the current gold price for smart contracts, and the tokenization of physical gold, which makes this gold tradable on the blockchain in a secure and transparent manner. Both technologies open up innovative opportunities that are of great interest to both traditional financial institutions and modern Decentralized Finance (DeFi) users.

Gold price oracles: precise price data for smart contracts

In the world of blockchain, smart contracts are the driving force behind DeFi applications. For these decentralized computer programs to function properly, they require precise and reliable external data, especially price information. This is where oracles come into play. An oracle is a bridge between the blockchain and the outside world and delivers the required information directly to the smart contract. Price oracles already exist for hundreds of currency pairs, mainly in the forex and crypto-to-fiat categories.

One outstanding example is Chainlink oracles, which are already available in many use cases and also provide the gold price as a reliable price feed for smart contracts. These gold price oracles make it possible for DeFi applications that rely on the gold price to always be supplied with up-to-date and accurate data. This is not only crucial for the security of the applications, but also for the accuracy of the resulting financial transactions. Banks, investment funds and even private individuals can implement automated trading strategies or collateralized credit applications based on the current gold price without having to worry about the reliability of the data sources.

Tokenization of physical Gold: Bridging the gap between traditional trade and DeFi

The tokenization of physical gold is another revolutionary step made possible by the blockchain. Tokenization allows physically stored gold bars or coins to be converted into digital tokens that exist on the blockchain. These tokens represent a fixed proportion of physical gold (e.g.one thousandth of a troy ounce per token) and can be traded freely without having to move the physical gold, but with high security. A great example for such tokenized gold, with almost $500m worth of gold tokenized and tradeable on-chain is PAX Gold.

This standardized process makes it possible to trade physical gold more efficiently and securely. In addition, tokenization opens up a multitude of new possibilities in the field of DeFi applications. For example, investors can use tokenized gold as collateral for loans, invest in gold derivatives or trade gold on decentralized exchanges without having to rely on traditional financial intermediaries. Blockchain technology ensures that every transaction is transparent, traceable and tamper-proof.

In addition, it is possible to exchange the tokenized gold for physical gold at the depositor at any time - in accordance with AML and KYC regulations, of course. The token, cryptographically secured and transparent, acts as a certificate of ownership. Switzerland in particular is a leader in terms of regulation and legal certainty for such new forms of ownership and is therefore ideally suited as a location from which assets and gold in particular can be tokenized.

Conclusion

The integration of gold into the blockchain world offers enormous opportunities for the traditional financial sector and the emerging DeFi industry.

For gold traders, banks and financial institutions, this development offers an exciting opportunity to modernize traditional business areas and tap into new markets. The combination of gold and blockchain is not only an investment into the future, but also an important step in the further. development of the global financial system.

It is not a question of if, but when tokenized gold will take a significant share of the global gold trade. The advantages of blockchain (security, transparency, decentralization) will lead to lower transaction costs and thus to the adoption of these new technologies.

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