Perth Mint is Planning Gold-Backed Cryptocurrency

Since ancient times, gold has been one of the most trusted investment commodities because of its intrinsic value. But in the modern world, the popularity of the precious metal is declining as people are in a rush to make more short-term profits by investing in company stocks, and of course the nascent, yet booming, cryptocurrency industry.

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But now, Australia's biggest precious metal refinery, Perth Mint, is set to leverage modern Blockchain technology for attracting investors back to trustworthy precious metals. It is developing its own cryptocurrency, which it will back with precious metals like gold.

Richard Hayes, CEO of Perth Mint, sees this as an opportunity to bring investors back to the traditional market.

ABC News quoted Mr. Hayes: “I think as the world moves through times of increasing uncertainty, you're seeing people look for alternate offerings. And you're seeing this massive flow of funds into the likes of Bitcoin at the moment because people are looking for something outside of the traditional investments.”

He pointed out that most Cryptocurrencies do not have any physical backing, and their market volatility is purely based on speculation. In addition to that, a large chunk of investors are refraining from investing in cryptocurrencies because of their volatility.

This is where Perth Mint’s gold-backed cryptocurrency comes in. As it is backed by a physical commodity, this cryptocurrency will be a much secure investment option.

"With a crypto-gold or a crypto-precious metals offering, what you will see is that gold is actually backing it,” Mr. Hayes said.

He added: "So it will have all the benefits of something that is on a distributed ledger that settles very, very quickly, that is easy to trade, but is actually backed by precious metals, so there is actually something behind it, something backing it."

Mr. Hayes is very excited about this new project and is a believer in the decade-old blockchain technology. According to him, this will provide more transparency in the system and will also make it more secure.

“These are very exciting developments. It's cutting-edge technology,” commented Mr. Hayes.

“There are a number of offerings out there that use standard blockchain as the underlying record-keeping system, but many of those are not actually gold-backed, so you're relying on the actual blockchain technology itself. So there's nothing in terms of cryptocurrencies that actually back the currencies. If you use precious metals to back something on blockchain or something that is allied to blockchain, it retains its intrinsic value, unlike the offerings from Bitcoin and Ethereum, which really rely on everyone believing that there's something behind it,” he added.

Over the past few years, Perth Mint has made advances in making precious metal trading more accessible to retail investors. It introduced an online trading platform with which traders can buy and sell precious metals around the clock.

Though the launch date for this project is not finalized, the CEO is expecting to introduce it within the next 12 to 18 months.