PAX Gold (PAXG)
PAX Gold (PAXG): Digital Ownership of Physical Gold
PAX Gold (PAXG) is a commodity-backed cryptocurrency that represents direct ownership of physical gold. Each PAXG token is backed 1:1 by one fine troy ounce of a 400 oz London Good Delivery gold bar, stored in professional vault facilities. This structure allows investors to own gold without the logistical challenges of storage and security associated with physical bullion. As an ERC-20 token built on the Ethereum blockchain, PAXG benefits from the network's security and enables fast, low-cost transactions globally, 24/7.
Issued by the Paxos Trust Company, a regulated financial institution chartered by the New York State Department of Financial Services (NYDFS), PAX Gold (PAXG) offers a high degree of trust and transparency. The company undergoes regular audits to verify that the supply of PAXG tokens corresponds exactly to the amount of gold held in reserve. Token holders can redeem their PAXG for physical gold bars or, for smaller amounts, through a network of physical gold retailers, providing a direct link to the underlying asset.
This digital asset serves as a bridge between traditional commodity markets and the modern digital economy. It can be used as an inflation hedge, a stable store of value within the volatile crypto market, or as collateral in various DeFi applications. Its divisibility allows for fractional ownership of gold, making it accessible to a wider range of investors compared to purchasing whole gold bars.
Technology
PAX Gold (PAXG) operates as an ERC-20 token on the Ethereum blockchain. This technical foundation means it does not have its own separate blockchain or consensus mechanism; instead, it leverages Ethereum's robust security, decentralization, and smart contract functionality. Transactions are processed and validated by Ethereum's network of nodes. The smart contract governing PAXG manages the issuance (minting) and destruction (burning) of tokens, ensuring that the total supply in circulation always matches the physical gold held in custody by Paxos Trust Company. This on-chain transparency allows anyone to verify the token supply via a blockchain explorer.
Tokenomics
The tokenomics of PAX Gold (PAXG) are straightforward and directly tied to its physical backing. The total supply of PAXG is dynamic and corresponds on a 1:1 basis with the number of fine troy ounces of gold held in reserve by Paxos. When a user purchases PAXG from Paxos with fiat or crypto, new tokens are minted. Conversely, when a user redeems PAXG for physical gold or its cash equivalent, the corresponding tokens are burned, removing them from circulation. This elastic supply model ensures that every token is fully collateralized. The primary utility of the PAXG token is to represent ownership of gold in a digital, easily transferable format.
Ecosystem
Within the broader crypto ecosystem, PAX Gold (PAXG) carves out a unique niche as a regulated, gold-backed digital asset. It competes with other gold-backed tokens but distinguishes itself through its regulation by the NYDFS, providing a higher level of investor protection. Unlike algorithmic stablecoins, its value is not maintained by complex software but by a direct, audited claim on a physical commodity. In DeFi, PAXG is used as a stable form of collateral for lending and borrowing, and as a store of value to hedge against the volatility of other cryptocurrencies. It offers a stable alternative to fiat-backed stablecoins like USDC or USDT, appealing to users seeking a hedge against both crypto market fluctuations and fiat currency inflation.
Frequently Asked Questions
PAX Gold (PAXG) is a digital token backed by real gold reserves. Each PAXG token represents ownership of one fine troy ounce of a London Good Delivery gold bar, held in secure vaults by Paxos Trust Company. It is an ERC-20 token on the Ethereum blockchain.
You can buy and sell PAX Gold (PAXG) on numerous cryptocurrency exchanges. Simply create an account on a supported exchange, deposit funds (fiat or crypto), and place an order to buy or sell PAXG. You can also purchase it directly from Paxos.
Yes, PAX Gold (PAXG) is issued by Paxos Trust Company, which is a trust company and custodian regulated by the New York State Department of Financial Services (NYDFS). This regulatory oversight provides a high level of consumer protection.
Paxos provides transparency through regular attestations from a top-ranking auditing firm to confirm that the circulating supply of PAXG matches the amount of gold held in reserve. You can also use their on-site tool to look up the serial number and physical characteristics of your allocated gold.
Yes, holders of PAX Gold (PAXG) can redeem their tokens for physical gold bullion directly from Paxos (subject to minimums). For smaller amounts, redemption is available through a network of physical gold retailers.
Paxos does not charge custody fees for holding PAX Gold (PAXG). However, on-chain transaction fees (Ethereum gas fees) apply when transferring PAXG. Small fees are also charged for the creation and redemption of tokens directly with Paxos.
The main use cases for PAX Gold (PAXG) include serving as a digital store of value, an inflation hedge, a tool for portfolio diversification, and as collateral in DeFi protocols. It makes investing in gold more accessible, divisible, and transferable.
Unlike shares in a gold ETF, which represent a claim on gold held by a fund, PAX Gold (PAXG) represents direct legal title to specific gold bars. PAXG is redeemable for physical bullion, offers 24/7 trading, and has higher portability as a digital asset on the blockchain.