gold backed crypto

What Is PAX Gold (PAXG)?

PAX Gold (PAXG) is a cryptocurrency issued by Paxos Trust Company, fully backed by physical gold on a 1:1 basis. Each token represents ownership of one troy ounce of a London Good Delivery gold bar. As an "asset-backed stablecoin," PAXG is redeemable and supported by real-world assets.

Unlike traditional paper gold products, PAXG exists as an ERC-20 token on Ethereum, allowing for seamless transfers and trading like any standard crypto token. The underlying gold is held in custody by regulated institutions. Users can redeem PAXG for physical gold or cash through the issuer, subject to account verification and applicable fees.

PAX Gold (PAXG): Current Price, Market Cap, and Circulating Supply

PAXG’s price closely tracks the international spot price of gold, as each token equates to one troy ounce of London gold. Its market capitalization is calculated by multiplying the token price by the circulating supply—the number of tokens issued and actively traded in the market. Circulating supply fluctuates as Paxos mints or burns tokens in line with adjustments to the underlying gold reserves.

As of January 4, 2026, referencing Paxos’ official website and CoinMarketCap methodology, PAXG’s price generally aligns with the spot price of London gold. Market cap changes in tandem with both gold prices and the total ounces held in reserve. Circulating supply equals the total ounces of gold backing all PAXG tokens. Sources: Paxos official statements and proof-of-reserves, CoinMarketCap asset page, LBMA London Gold Benchmark.

Who Created PAX Gold (PAXG) and When?

PAXG was launched in 2019 by Paxos Trust Company, a New York State trust company regulated by the New York Department of Financial Services (NYDFS). Paxos is responsible for compliant custody of customer assets and issuing/redeeming asset-backed tokens according to regulatory guidelines.

The issuer regularly publishes proof-of-reserves and audit reports, undergoes compliance oversight, and engages third-party auditors to ensure a strict 1:1 correspondence between tokens issued and physical gold held.

How Does PAX Gold (PAXG) Work?

PAXG utilizes a mechanism that "tokenizes" physical gold: whenever the issuer deposits new gold into its vaults, an equivalent amount of PAXG is minted on-chain. Conversely, when users redeem PAXG for gold or cash through the issuer, corresponding tokens are burned to keep supply and reserves in sync.

ERC-20: As an ERC-20 token on Ethereum, PAXG adheres to industry-standard interfaces for transfers and approvals, ensuring compatibility with wallets and exchanges. Managing PAXG requires a standard Ethereum wallet; transactions incur gas fees.

Good Delivery: This is the London Bullion Market’s standard for gold bars, guaranteeing quality and facilitating global recognition and custody. PAXG is directly linked to these standards, enhancing its redeemability.

Custody & Proof: The underlying gold is stored in certified vaults under regulatory oversight by the issuer. Regular proof-of-reserves and audit reports are published, allowing users to cross-verify supply and reserves via block explorers and official disclosures.

Wallets and Ecosystem Extensions for PAX Gold (PAXG)

Wallets: All mainstream Ethereum wallets—including browser extensions and mobile apps—support PAXG. Hardware wallets offer secure offline private key storage, mitigating theft risks. Hot wallets (internet-connected) offer convenience but require heightened security awareness; cold wallets, being offline devices, provide enhanced protection.

Tools: Block explorers track transactions and contract details; data aggregators provide real-time price and market cap monitoring; issuer portals support account verification, redemption, and access to audit documentation.

Extensions: Institutional-grade custodial services are available from select providers. Some DeFi protocols may support PAXG as collateral or settlement assets; however, users should carefully assess smart contract risks before use.

Key Risks and Regulatory Considerations for PAX Gold (PAXG)

Gold Price Volatility: As PAXG’s value is tied to gold, declines in global gold prices will directly impact token value.

Issuer & Custody Risk: Despite regulatory oversight and audits, changes in issuer operations, custodial arrangements, or compliance policies can affect redemption processes or fee structures.

Smart Contract & On-Chain Risks: Contract vulnerabilities, phishing attacks, or private key leaks can result in asset loss. Transactions require gas fees; network congestion can increase costs or delay confirmations.

Exchange Risks: Custodial risks exist when storing assets on centralized exchanges. Users are advised to enable account security features and promptly withdraw funds to self-custody wallets.

Regulatory Considerations: Asset-backed stablecoins are subject to local jurisdictional regulations. Cross-border use may involve tax or compliance reporting obligations; users must adhere to local laws.

Long-Term Value Proposition of PAX Gold (PAXG)

Divisible Gold Ownership: Supports micro-divisions and 24/7 settlement, making gold accessible for micropayments and rapid transfers.

Global Liquidity: Blockchain settlement enables cross-border efficiency, reducing logistical delays associated with traditional gold transfers.

Transparency & Auditability: On-chain data and published proof-of-reserves enable transparent verification by both institutions and individuals.

Portfolio Diversification & Hedging: Gold’s historically low correlation with stocks and bonds makes it a favored hedge against inflation and systemic risk; PAXG brings these benefits into the crypto ecosystem.

Cost Structure: Compared to holding physical bullion, PAXG reduces custody and logistics costs. However, users must consider redemption fees, on-chain gas costs, and platform trading fees as part of total ownership cost.

How to Buy and Securely Store PAX Gold (PAXG) on Gate

Step 1: Registration & Verification. Create an account on Gate, link your email or mobile number, enable two-factor authentication (2FA), and complete KYC identity verification to unlock higher limits and compliance.

Step 2: Deposit Funds. Choose your preferred funding method—commonly USDT deposits via blockchain or fiat gateways (subject to platform availability). Confirm receipt of funds in your account.

Step 3: Search Trading Pairs. On the trading interface, search for “PAXG” and select trading pairs like PAXG/USDT. Review order book depth, market price, trading fees, and slippage.

Step 4: Place Your Order. Choose between limit orders (set your ideal price) or market orders (instant execution but possible slippage). Confirm trades in your orders and asset pages once filled.

Step 5: Withdraw to Self-Custody Wallet. Prepare an Ethereum ERC-20 compatible wallet address; first test with a small withdrawal to confirm the address and network settings. Enable withdrawal address whitelisting and anti-phishing codes on Gate before withdrawing to reduce risks.

Step 6: Secure Storage. Use hardware wallets or multisig solutions for private key security. Back up recovery phrases securely and store them offline. When using hot wallets, beware of phishing links or fake contracts—verify “PAX Gold (PAXG)” contract details on block explorers against official disclosures.

Comparison: PAX Gold (PAXG) vs Tether Gold (XAUT)

Issuer & Regulation: PAXG is issued by Paxos Trust under NYDFS regulation; XAUT is issued by Tether-affiliated entities with different regulatory frameworks—refer to their respective compliance documentation for details.

Custody & Redemption: Both claim full physical gold backing with redemption options, but redemption processes, minimum thresholds, and fee structures differ. PAXG emphasizes a 1:1 mapping with Good Delivery bars and detailed custody disclosures; XAUT’s specifics rely on its own official statements.

Network & Fees: PAXG mainly operates as an Ethereum ERC-20 token (incurring Ethereum gas fees); XAUT supports different networks and fee structures—consult its official documentation. Users should compare liquidity depth and transaction costs before choosing.

Transparency & Proof: PAXG provides regular proof-of-reserves and third-party audits; XAUT offers different forms and frequencies of disclosure. Investors should evaluate based on audit detail and verifiability.

Liquidity & Use Cases: Trading depth and utility scenarios differ across platforms for both tokens. Evaluate according to personal trading habits, redemption needs, and fee preferences.

Summary: Key Takeaways on PAX Gold (PAXG)

PAX Gold (PAXG) fuses the value stability of London gold with blockchain transferability: each token represents one troy ounce of Good Delivery gold bar held by a regulated issuer providing regular audits and redemption options. It’s suitable for users seeking digital ownership, divisibility, and fast settlement of gold holdings—but it comes with risks such as price volatility, issuer/custodian factors, smart contract vulnerabilities, on-chain fees, and platform risks. For beginners, it’s recommended to follow Gate’s stepwise process: secure account setup/KYC, deposit funds, place trades, conduct small test withdrawals to self-custody wallets, then enable private key management features like address whitelisting. Over the medium-to-long term, monitor issuer reserve proofs/audit updates to assess transparency and compliance—adjust portfolio allocation based on your risk tolerance and investment objectives.

FAQ

How Do Gold-Backed Cryptocurrencies Differ from Regular Stablecoins?

Gold-backed cryptocurrencies are tokens fully supported by reserves of physical gold—each token corresponds to a specific quantity of real gold. Unlike fiat-backed stablecoins like USDT that are pegged to the US dollar, these tokens are pegged to gold’s value, offering an inflation hedge. This allows holders to combine blockchain utility with the value preservation of hard assets.

Where Is the Physical Gold Backing My Tokens Stored?

The physical gold backing such tokens is typically stored securely with professional vaults or custodians that undergo regular third-party audits. For instance, PAX Gold’s reserves are held in certified international vaults. Buyers can access official audit reports for transparency—confirming that each token is backed by equivalent physical gold reserves.

Can Gold-Backed Tokens Lose Value Like Fiat Currency?

The value of gold-backed tokens is linked directly to spot gold prices. Over the long term, gold is regarded as a store of value—unlike fiat currencies that can depreciate due to excessive issuance. However, short-term price fluctuations can occur based on market dynamics. Compared to holding cash subject to inflation risk, these tokens provide enhanced wealth protection mechanisms.

How Are Gold-Backed Tokens Transferred or Traded on Blockchain?

As crypto tokens—often ERC-20—gold-backed tokens can be freely transferred on-chain like any other major cryptocurrency. You can trade them on exchanges like Gate or transfer them into personal wallets for storage. Transfers are fast with low fees compared to the logistics and time cost of moving physical bullion—making them ideal for investors needing flexible liquidity.

What Are the Risks Associated With Gold-Backed Tokens? How Can They Be Mitigated?

Key risks include issuer credit risk, regulatory changes, and smart contract vulnerabilities. To mitigate these: choose reputable issuers (like Paxos), regularly review audit reports, only buy well-tested tokens, store large holdings in hardware wallets, and stay informed about relevant regulatory developments so you can adjust strategies proactively.

Glossary: Essential Terms Related to Gold-Backed Cryptocurrencies (GBC)

• Proof-of-Reserves: Verifies that on-chain data matches physical gold holdings to ensure real asset backing.
• Stablecoin Mechanism: Maintains token price stability by pegging it to gold’s value—reducing market volatility.
• Smart Contract: Automates processes like gold redemption or exchange following transparent rules coded into the blockchain.
• On-Chain Audit: Periodic public disclosure of reserve data on-chain so anyone can verify authenticity and compliance.
• Cross-Chain Bridge: Allows gold-backed tokens to move across multiple blockchains for improved liquidity and usability.
• Redemption Mechanism: Enables holders to exchange tokens for physical gold or fiat according to established rules—ensuring asset safety.

References & Further Reading: Gold-Backed Cryptocurrencies

• Official Website / Whitepaper:

• Development / Documentation:

• Authoritative Media / Research: