GOLD, BUT ON THE BLOCKCHAIN: WHAT IS TOKENIZED GOLD?
Gold has existed for thousands of years, but the way people access it is changing. Imagine wanting exposure to physical gold without buying a heavy bar, finding storage, dealing with insurance, or waiting for traditional markets to settle.
That is where tokenized gold comes in. Tokenized gold is a blockchain-based digital token representing a specific amount of physical gold held by a custodian. Depending on the product, one token can represent an ounce or another defined amount of gold. Examples include Tether Gold (XAUt) and Paxos Gold (PAXG).
The process generally works through three layers: physical gold is purchased and stored in a secure vault, tokens are minted to represent the corresponding gold, and audits or attestations can help verify that the reserves match the token supply.
The interesting part is what blockchain adds. Instead of dealing with a physical bar, tokenized gold can be transferred and traded digitally, supports fractional ownership, and can be available around the clock on crypto markets. Some tokenized-gold products can also interact with DeFi applications, depending on their structure and compatibility.
But there is an important distinction:
Tokenized gold is not the same as holding a gold bar yourself.
You are relying on the issuer, custodian, reserve structure and redemption terms. Regulatory changes, liquidity differences and fees are also factors to understand.
And don't confuse it with Binance's XAUUSDT perpetual contract: tokenized gold represents physical gold through a digital token, while XAUUSDT is a derivative designed to track gold's price without giving you ownership of the underlying metal.
Gold has been around for thousands of years. Tokenization is one way the market is bringing it into the digital economy.
Now how XAUt and PAXG differ, how redemption works, and what risks to consider? Visit Binance Academy and read the full article: “
What Is Tokenized Gol?"
#TokenizedGold