Gold investment is no longer confined to physical assets. Through digital gold tokens like PAX Gold (PAXG), you can securely own, trade, and monitor gold in a crypto format. For new investors, however, the concept of tokenized gold may seem complex, as it merges precious metals with blockchain technology.
Understanding key concepts in the PAXG ecosystem—like tokenization, ERC-20 standards, audits, and physical redemption—can help you make informed investment decisions. PAXG is also available on platforms like Pintu, making it easy to buy, store, and manage this digital asset.
Curious how PAXG works and why it’s seen as a bridge between gold and crypto? Read this full guide!
Article Summary
💰 PAX Gold (PAXG): A digital gold token on Ethereum, issued by Paxos Trust Company. Each token represents one troy ounce of gold stored in LBMA-certified vaults.
🔐 Key Features: PAXG offers fractional ownership of physical gold, low transaction fees, transparency through monthly audits, and redemption options in gold, fiat, or crypto.
🌍 Use in DeFi: PAXG serves as collateral or a yield-bearing asset in the DeFi space, offering a stable, flexible option for inflation-conscious crypto users.
What Is PAX Gold (PAXG)?
PAXG is a crypto token backed 1:1 by physical gold—each token equals one troy ounce of London Good Delivery gold. Issued by Paxos Trust Company, it operates on Ethereum as an ERC-20 token.
Unlike fiat-backed stablecoins like USDT, PAXG is pegged to the real-time price of gold, making it a “digital gold token” with a tangible underlying asset.
Gold has been recognized as a safe haven asset for thousands of years. However, in today’s digital age, owning physical gold is often seen as impractical due to storage costs, security risks, and limited liquidity. Tokenization through blockchain technology—such as that offered by Pax Gold (PAXG)—is transforming the way people invest in gold, combining the stability of precious metals with the efficiency of the crypto world.
History and Background
PAXG was launched in September 2019 by Paxos Trust Company, a New York-based financial institution also known for the USDP stablecoin. Paxos was co-founded by Charles Cascarilla and Rich Teo, both with strong backgrounds in finance.
Regulated by the New York Department of Financial Services (NYDFS), Paxos is a trusted entity in the blockchain space, offering legal protection and security for its issued tokens.
How Does PAXG Work?
PAX Gold (PAXG) functions as an ERC-20 token on the Ethereum network, representing one troy ounce of gold securely stored in Brinks vaults, certified by the London Bullion Market Association (LBMA). Each token is linked to a uniquely identified gold bar, which can be verified through a lookup tool on Paxos’ official site.
To ensure transparency, Paxos undergoes monthly third-party audits, publicly publishing results to confirm that all circulating tokens are backed by physical gold. The PAXG smart contract has also passed security audits to ensure its integrity on the Ethereum blockchain.
PAXG can be redeemed for physical gold (minimum 430 tokens), fiat (USD), or other crypto assets via Paxos or supported exchanges, giving users full flexibility in managing their investments.
Benefits of PAXG
- 💼 Gold Investment Without Physical Hassle
- No need to store physical gold yourself.
- Own fractional gold using only a digital wallet.
- Enables fractional access not available in traditional markets.
- A practical tool for portfolio diversification with precious metals.
- 💸 Zero Storage Fees
- Avoid traditional storage costs associated with physical gold.
- 🌐 Global Access & High Liquidity
- Tradable 24/7 on crypto exchanges and DeFi platforms.
- No restrictions from physical market hours.
- Enables fast, cross-border transactions.
- High liquidity makes it ideal for both short- and long-term strategies.
- 🛡️ Regulatory Assurance & Legal Protection
- Issued by NYDFS-regulated Paxos Trust Company.
- Monthly audits boost public trust and transparency.
- Legal framework + real asset backing + digital efficiency in one product.
PAXG provides a modern, efficient, and secure way to own gold, suitable for crypto-native and traditional investors.
Risks and Considerations
- 📉 Gold Price Fluctuations
- PAXG’s value follows real-time global gold prices.
- Market changes directly impact the token’s value.
- 🪙 Physical Redemption Threshold
- Redeeming PAXG for physical gold requires a minimum of 430 tokens.
- 🧠 Technology & Digital Security Risks
- As an ERC-20 token, it relies on wallet and platform security.
- Potential risks: hacks, private key loss, and smart contract bugs.
- Ethereum gas fees can also affect transaction efficiency.
- ⚖️ Institutional and Regulatory Exposure
- Although regulated, Paxos could still face institutional or regulatory challenges.
- Any operational issues at Paxos may directly affect PAXG.
Understanding these risks helps investors make informed and strategic decisions when adding PAXG to their portfolios.
How to Buy and Store PAXG
PAXG is available on various platforms, including the Pintu app. You can purchase it using ETH or stablecoins, and store it in any ERC-20 compatible crypto wallet. Pintu offers a seamless and secure experience for managing PAXG. Here’s how to buy and store PAXG on Pintu:
- Download the Pintu app from Google Play or App Store.
- Complete KYC and connect your bank account.
- Deposit IDR into your account via bank transfer or VA.
- Search for PAXG in the asset list.
- Tap “Buy” and enter your desired amount in Rupiah.
- Confirm your order and complete the purchase.
- PAXG will be stored safely in your Pintu wallet.
Pintu also offers other crypto assets like Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB), all carefully curated under regulatory compliance for your safety. Pintu is compatible with popular wallets like MetaMask, giving you full control over your assets. Download Pintu now and enjoy secure investing under the supervision of Bappebti and Kominfo.
Want to learn more? Pintu offers educational content through Pintu Academy, where you can explore beginner to advanced crypto topics—updated weekly. Please note that Pintu Academy content is for educational purposes only and not financial advice.
PAXG in the Crypto Ecosystem
PAX Gold (PAXG) is more than a passive gold investment—it plays an active role in decentralized finance (DeFi). As an ERC-20 token, it integrates with many DeFi platforms. For instance, PAXG can be used as collateral in lending protocols like Aave or Compound. You can lock PAXG and borrow assets like USDC or ETH without selling your gold exposure.
PAXG is also usable in yield-generating platforms, both CeFi (like Nexo, Celsius) and DeFi (like Yearn Finance). You deposit your PAXG, it’s lent out to borrowers, and you receive yield in return. This transforms PAXG into a productive asset, not just a store of value. Its ability to function in both stable and dynamic roles makes PAXG ideal for investors wanting safety and income within the crypto economy.
Conclusion
PAX Gold (PAXG) is a powerful example of how blockchain can modernize traditional finance. By tokenizing physical gold into globally tradable ERC-20 tokens, PAXG democratizes gold ownership, no longer exclusive to large investors or institutions.
Regulated by NYDFS and backed by transparent audits, PAXG offers trust and accountability. With features like redemption, DeFi utility, and low costs, it’s one of the most flexible ways to invest in gold today.
For those seeking the stability of gold while participating in the fast-moving world of crypto, PAXG is an ideal hybrid asset. It balances security and liquidity, tradition and innovation, providing peace of mind with potential growth in a volatile world.
References:
- Cointelegraph. What Is Pax Gold (PAXG) and How Does It Work?
- Bake.io Blog. What Is Pax Gold (PAXG)? The Cryptocurrency Backed By Physical Gold