There are countless talks going around about Bitcoin versus gold, but the foundation of Bitcoin i.e. the blockchain may become the foundation of the gold market as well, in the near future.
As of today, the facts of the gold transactions are usually stored in individual data systems which are not always secure. Investors many times, complain that due to the involvement of numerous parties in the supply chain (like miners, wholesale dealers, retailers etc.), the data can be changed for one’s benefit or even removed without the knowledge of other parties.
Many financial organizations are trying to bring greater clarity and security to the trading of precious metals like gold, diamond etc. But is blockchain as invincible as they assert and will the tie down of blockchain and gold trade lead to a digital gold flash? Recently, an organization launched a platform to trade gold, let me brief you about how they used blockchain to launch their digital gold platform.
The Tradewind’s story
This year, in March, Tradewind Marketers Inc. authorized the launch of an innovative digital gold trading platform; Tradewind Inc. is a technology service provider organization supported by Sprott Inc. and Goldcorp Inc. This platform launch has resulted in the gold market taking a quantum leap in the coming days because this platform focuses on simplifying and speeding up the gold business and bring down the transaction charge.
This gold exchange platform was in the cards for around two years, with the organization receiving aids from some big players of the gold industry including both Sprott and Goldcorp Inc. The organization quoted that this digital exchange platform is anticipated to transform the business, arrangement, and proprietorship of actual gold.
Matt Trudeau, the president of New York-founded Tradewind mentioned in an interview that today’s gold market is a physical market. Most of the business is done over the phone, through email, at times on chats or faxes. They felt that by bringing this new platform, they could reduce the attrition and transactional charges in the market and lead to increased exchangeability and price recovery.
Tradewind’s contribution pairs with other blockchain-based gold platforms, including a collaboration between CME Group Inc. and Royal Mint of UK. Although cryptocurrencies are not stable but the underlying technology – blockchain is steady. The blockchain application development technology is a secure decentralized ledger platform which has been gaining acceptance in different sectors from financial services to healthcare to food.
Tradewind will be using a customized blockchain ledger app called VaultChain which will identify the participants in a secure manner, list the gold and settle the transactions. Initially, this platform is set to target the physical gold traders in North America but in future, it is said to be operating on a global scale.
As per news reports, Matt Trudeau also quoted that the biggest advantage of this innovative technology is to bring down the investment charge. He further added that the VaultChain Gold will be exempted from the enduring management and regulatory fees linked with safekeeping products like exchange-traded funds.
Rather than levying the regulatory fees, Tradewind will make its revenue from the exchange fees. It is also believed that Sprott Inc. owns around 20 percent of the VaultChain platform and they are planning to own the dealership of the exchange. Having said that, it will be little early to predict if Sprott Inc. will move its physical gold trust on to the VualtChain platform.
The CEO of Sprott Inc., Peter Grosskopf, mentioned in an interview that gold has always been labeled as a useless, idle, a difficult to transact with product and as if blockchain was invented for gold trades. He also mentioned that these two will go along together unbelievably powerful. The time when gold will be used as a form of digital cash, displacing cryptocurrencies and setting up a completely new user base is near.
Even though Bitcoin, the biggest cryptocurrency, has lost about 40 percent this year, gold prices have shot up by almost 3.1 percent. People will be able to possess gold in sectional quantities in their digital wallets directly in the VaultChain blockchain and will not be charged any management or regulatory charge.
The Take away:
It will be too early to predict the success or failure of this VaultChain platform designed by Tradewind, only time can tell that. But all we can predict is that the gold transactions will be done in a more transparent and safe manner.
The blockchain and crypto tokens could play a vital role in decreasing the risk because they approve of unchanging records, verified and financial security against bad actions. Hence if this and other such platforms succeed, people will turn to gold trading and the complete landscape of the traditional physical gold trading will change.
If such blockchain-based gold platforms go ahead, they will be able to link the metal manufacturers, upholders, dealers, stakeholders, and market creators. This will also create opportunities for participants to execute their business more proficiently, cost-effectively and safely.