Everything You Should Know About PAX Gold (PAXG)

With the growing interest of the public in cryptocurrency trading, it has become very important to keep the ecosystem stable and secure. PAX Gold is a cryptocurrency that is facilitating in this purpose. It is a gold hybrid that assists in bridging the gaps between any two investments made.

The cryptocurrencies, NFTs and other modern means of trading are getting hype in the present era, but this does not decrease the demands of the luxurious assets such as gold.

PAX Gold is a way of integrating the cryptocurrency with the physical commodities. It proved to be a new adventure for the retailors attracting a number of traders all around the world. Here is a comprehensive article about the working and importance of PAX Gold in the crypto market and how it is facilitating the retailors with its services globally.

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What Is PAX Gold?

Gold has been used as a store value and means of exchange since thousands of years in the past. Though the decentralized digital currency got hype in the past recent years, still it did not lessen the demand for gold. Gold being an expensive commodity could be out of reach of many investors though.

PAX Gold, a cryptocurrency company is working on making the ownership of gold possible and accessible for everyone so that the investors could easily trade gold just like any other currency in the world.

Paxos is a non-profit firm that is operating in the New York that holds the gold reserves that are used to back up the Paxos Gold. This cryptocurrency PAXG, backed up by Paxos is also regulated by the London Bullion Market Association (LBMA) certified gold bars.

The investors dealing with the PAX Gold have no need to secure and store the physical gold or move it from one place to another. It makes it easily accessible to the investors as they can buy the shares of gold fractionally. This solves the problem of buying gold for them that may be inhibited due to the high cost of gold in the market.

PAX Gold integrates the attributes of both the cryptocurrency and the physical gold that could prove fruitful for solving the problems of the modern times. The problems faced by the investors in everyday trading such as lack of liquidity, higher charges and storage concerns could be solved.

Who Regulates PAX Gold?

A technical company and financial institution named as the Paxos Trust Company, founded PAX Gold in 2012. The Firm is based in New York city, and it is known worldwide for its specialization in the blockchain technology. Two former analysts working at different organizations in New York kept the foundation of Paxos Gold years back.

Paxos is not only working on the PAX Gold project, rather there are multiple other projects that are created by Paxos. The United States dollar, stablecoin and PAX Dollar (USDP) are some of the examples of these projects. Paxos received strong support from multiple organizations and investors such as PayPal, Mithril Partners and OakHC/FT and collected a huge amount of funds worth almost $500 as a backup.

Working of PAXG

The PAX Gold token is designed on the basis of the Ethereum blockchain technology. Therefore, it provides the token the facility that it can be moved into multiple platforms, wallets, decentralized financial (DeFi) platforms and many other applications that use Ethereum as a basis. These tokens are allowed by the PAX Gold to be staked, redeemed or traded with the gold bars of good quality.

These gold bars are stored safely in encrypted vaults and the London Bullion Market Association credits them. Though it provides excellent security services and extremely fine quality of gold to its customers, no fee is charged by the PAX Gold for protecting and storing the assets. however, the customers may have to pay a minimal transaction fee only 0.02%.

Is PAX Gold Safe?

PAX Gold is trusted by the traders due to its transparency in addition to its premium gold standards. The New York Department of Financial Services (NYDFS) is the regulatory body that monitor the activities of both the PAX Gold and its founding company the Paxos Trust.

Moreover, the assets of the company and the consumers are protected independently by PAX Gold. In case of any illicit activity or bankruptcy, the assets of the customers remain secured.

Every month, a third party carries out the audits for PAXG. This is done to make sure if the supply of PAXG tokens match with the gold reserves of the firm.

Then whatever the results come out; they are published on the official website of Paxos. Moreover, the developers in the PAXG also conduct audits of smart contracts time to time. It helps in finding out any problem or potential bugs that may cause hinderance in the network operation.

Is PAXG Real Gold or Not?

Operating on the blockchain network, PAX gold exists in the form of gold tokens. By tokenization, the intangible and physical currency is digitally transformed into crypto tokens. The actual gold from Paxos is represented by the tokens from Paxos Trust company.

As the value of gold keeps on fluctuating and mostly increases with time, it is a good idea to store money in the form of gold. It mostly creates a barrier in the way of inflation.

If the value of USD falls, the prices of gold in USD become higher and if USD value increases, then gold loses its price in USD. Therefore, the investors who plan to tackle the inflation and price hike era before time, mostly use gold as their store value.

There are serial numbers assigned to the PAX gold tokens that match with the corresponding gold bars stored. If one puts the Ethereum wallet address of any individual on the PAXG look up tool, all the attributes such as value, serial number etc. of the owner physical gold could be determined easily.

In addition to that, there is also an option of conversion available for the owner where at the present prices of gold in the market, they can convert it into money, gold bullion bars that may be allocated or unallocated or any other cryptocurrency of their own choice.

Difference Between PAXG and Gold ETFs

Owning a gold ETF refers to the condition where the owner does not own the actual gold rather a contract that copies the cost of gold in the market. However, if one owns a PAXG token, it is directly related to the corresponding gold bar that is kept secured in the vault situated in London. Each of the token matches with the number assigned to the bar.

The ETFs are used to track the price of the commodities. By using them, the traders can get an idea of the market price of gold, but they cannot actually own it.

Having the ownership of gold ETF is similar to the situation where in an agreement, a party allows one to have the ownership of a limited percentage of the pooled gold. However, the complete ownership of the metal cannot be considered similar to the gold ETF.

This could be understood by the example that if a person owns an ETF, he may get the price lesser than that at time of contract. This is due to the reason that he does not own the real metal rather the ETF.

On the other hand, representing the real gold in terms of token is done by PAXG. Every PAXG token can be held equivalent to one troy ounce of gold. This gold can be identified by the assigned sequential numbers and is stored in the vaults in London. Trading a physical gold bar may take days to be settled but a PAXG does not. This is due to the reason that as an ERC-20 token, Ethereum handles it.

The modern and traditional investors, who want to keep pace with the changing trends without any compromise on their main aims can trust with PAX Gold that is a completely perfect assessment for them.

One can get benefited from the physical and digital attributes of both PAXG and ETFs by investing at a single place. Some of the key difference of both are mentioned below.

  • Representation

Gold ETFs are used to track the price of the commodity underlying it in the market. However, physical gold is digitally represented by PAXG.

  • Backup

If one owns the gold ETF, it does not mean having the ownership of real gold. On the other hand, if one owns the PAXG it is considered similar to owning the gold bar corresponding to the token kept in a vault in London.

  • Existence

Gold ETFs are only contract that exist on a paper. However, in the form of ERC-20 tokens, the PAX Gold is present on the Ethereum blockchain.

  • Usage

One can only cash the gold ETF in response to fiat currency. In contrast to that, the goods and services could be bought using the PAX gold.

How Can You Make Money Using PAX Gold?

There are two ways to make money using PAX Gold. One of them is the minimal fee for tokenization of asset that the customer has to pay initially at the time of purchase. Second is the little premium that is to be paid on the gold.

The worth of tokenization fee to be paid depends upon the amount that is initially purchased by the customer. The fee charged is relatively very less for huge amounts purchased, for one ounce purchased the fee charged is 1% or may be lesser sometimes.

There is no custody fee charged by Paxos, however the customer has to pay 0.02% fee when over the blockchain network, they decide to buy a token or sell it.

Is It Possible to Stake PAXG?

One can lend the PAX Gold to a lender in order to earn interest. However, depending on the lender the rates of PAXG could vary. Interest can also be earned by staking PAX Gold but for this purpose, the tokens have to be locked for a specific period of time.

Method of Buying PAXG

One can buy PAXG on multiple platforms such as Kraken, Binance, Coinbase and KuCoin. In order to buy the PAXG tokens on the Coinbase platform, these steps need to be followed.

  • First of all, install a PAXG friendly wallet in the device. Coinbase is an example of self-custody wallet.
  • Keep your recovery phrase safely in it.
  • Then, make the required preparations for the network fee of Ethereum after understanding it.
  • Buy Ether (ETH) and then transfer it into the wallet downloaded initially.
  • Finally, PAXG can be purchased by using the trade section.

What are the Positive Aspects of PAX Gold?

There are multiple positive attributes of PAXG token that makes it reliable among the investors. Some of them are mentioned below.

  • Project Quality

PAX Gold has a strong reputation in the financial market that represents real concerns related to gold and its prices in the market. PAX Gold will certainly touch the new heights of popularity if it continues providing its customers with high security, excellent quality gold and other multiple beneficial traits that could contribute to the long-term success of the firm.

  • Regulation

Safety and security should be the foremost priority while dealing with crypto currency. In case of any illicit activity, the scammers can easily get their hands over the user’s wallet and take out all money within no time.

The crypto market has been asked to increase the regulation repeatedly to provide the protection from cybercriminals. However, PAX Gold is completely regulated and is looked after by the New York Department of Financial Services (NYDFS). Therefore, there are very less chances of scams or any illicit activity in the future.

  • Global Issues

While dealing with the natural disasters or geopolitical or economic issues, such as pandemics, wars or inflation, people tend to shift their attention towards the safer assets rather than buying the volatile currencies.

This increases the demand of gold in the financial market. This is proved by the stable price of PAX Gold tokens throughout the year 2022 despite the increasing inflation and market volatility all around the globe.

What are the Negative Aspects of PAX Gold?

Though the demand of PAX Gold tokens is increasing among the traders, there are some concerns attached too with buying these gold tokens. A few of them are mentioned below.

  • Highly Competitive

In the gold backed crypto domain, there are many other projects that are competing with the PAX Gold. One of the strongest competitor of PAX Gold is Tether Gold (XAUT). It is also one of the leading projects in the gold sphere. It is recognized by other reliable brands and provides the same services to the customers as PAXG.

It has become mandatory for PAXG to outsmart these leading projects, however there are no such plans drafted yet by the firm to do so.

  • Lacks Detailed Roadmap

Though PAXG is backed up by the trustworthy Paxos company, however Paxos has not yet provided any future roadmap for the firm. There are no new initiatives or projects started by the firm yet that is a major concern of majority investors.

What is the Future of Asset-Backed Tokens?

To represent any physical asset digitally, asset-backed tokens are used. They can be used to retrieve any underlying asset. One can think of the asset as any possession related to the person that may be real estate, gold, oil, equity, rice or any daily life entity.

The use of asset-backed tokens has made it possible to access the open markets that were out of reach of the investors due to their high costs. This is possible now by carrying out a transaction that does not need any central figure.

This practice helps to ensure the transparent and secured nature of the business deals. It is creating a totally new approach for the traders to carry out business deals in the future. Moreover, it is also creating new opportunities for them about owning and creating wealth.

In the era of inflation or currency depreciation in any country or an unpredictable stock market, the asset-based tokens could prove helpful. At the times of need, the combination of digital liquidity and asset value provides a viable financial choice to the individuals. This is only possible due to the potential of asset-based tokens.

As already mentioned, asset backed tokens have multiple applications, they have a bright future ahead. The uses and ways of utilization of the asset-backed tokens are still being discovered today and everyday a new application appears on the screen. There are multiple possibilities of using the asset backed tokens that could be imagined in order to help the people and organizations globally.


Though the crypto market has expanded largely in the recent years, the increase in the demand of physical assets has not been affected by that. There is nothing better than owning the metal whose price increases with time. By using the liquidity and speed of the increasing crypto market, PAXG is providing the alternative opportunity to the physical commodities over the blockchain network.

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