What is Pax Gold? (PAXG)

First published
July 8, 2022
Last updated
July 8, 2022

Launched in 2019, PAXG is an ERC-20 token based on the Ethereum blockchain.

Pax Gold (PAXG) is a cryptocurrency that can be redeemed for physical gold held in vaults by Paxos, a New York-based company that provides financial services. PAXG’s parent company, Paxos Trust, is regulated by the New York Department of Financial Services (NYDFS).

One PAXG represents one fine troy ounce of a London Good Delivery gold bar, which is one of the highest quality gold bar in the market. These gold bars are under the custody of Paxos Trust Company and are held in some of the world’s most secure vaults. Furthermore, Paxos Trust holds its customers’ assets separate from its own; this means that customers are protected in case of bankruptcy. 

Being an ERC-20 token, PAXG is portable across an extensive infrastructure of exchanges, decentralized financial platforms, Hodlnaut on the Ethereum network. PAXG can also be staked, traded, and redeemed for real gold bars.  

Key Advantages of PAXG

  • Accessible: The tokenisation of PAXG has created an exciting opportunity by lowering the access point for new investors to purchase gold. This means individual and retail investors can purchase gold at a lower price point by buying PAXG tokens.

  • Redeemable: Another benefit of PAXG is that it presents unique and versatile redeemability options, allowing investors to convert their PAXG to fiat currency, alternative cryptocurrencies, allocated gold, or unallocated gold.

  • Flexible: Being housed on the Ethereum network, PAXG benefits from a multitude of benefits programmed into the network. Ethereum’s system is one of the most secure blockchain structures covered by complex, algorithmic measures to minimise hacking. Furthermore, this widely trusted network has been adopted by many platforms, meaning investors extract practical benefits in being able to trade their PAXG on multiple crypto platforms.

Hodlnaut now supports the PAXG asset, and hodlers can conveniently purchase PAXG from us or deposit their PAXG with us to earn interest. The effective rates for PAXG’s open and fixed terms are as follows:


Q. Why is gold, and therefore PAXG, seen as a recession-proof asset?

Fiat currencies lose value over time due to inflation and the printing of notes by governments. However, gold is a finite resource that cannot be infinitely added to the economy, making it a store of value with a fixed quantity. Historic data has shown that gold has held its value even in times of bleak macro economic outlook, making it appear to be an asset that could be used to hedge against recession. 

Q. What is the benefit of having physical gold represented on a blockchain? 

Representation of gold on the blockchain allows the divisibility and transportability of any digital asset like Bitcoin, sans the drawbacks of limited storage costs and high physical transportability.

Q. How Does PAX Gold Differ from Gold ETFs?

Gold ETFs are one of the most popular ways for investors to gain exposure to gold. Gold ETFs offer investors a safe way to invest in gold and exposure to any potential movement in the price of gold. However, Gold ETFs do not provide ownership rights over gold itself. On the other hand, PAX Gold offers traders the same price exposure and simplicity as Gold ETFs while providing them with actual ownership of physical gold.

Final Take

PAX Gold is a gold-backed cryptocurrency that allows investors to gain direct exposure to the price of gold through cryptocurrency. The company behind the project has extensive experience in crypto and gold markets and is regulated by the NYDFS. Those looking to invest in both gold and cryptocurrency may wish to consider PAX Gold. If you want to learn more about PAXG, please refer to the Whitepaper here.

If you have any questions, email us at support@hodlnaut.com, and we will be happy to answer your queries.

Disclaimer: By using Hodlnaut, users expressly acknowledge and agree to the Terms of Use listed on our website at www.hodlnaut.com. This includes the relevant risk warnings applicable to you as a user of Hodlnaut's services, prior to/when carrying out Digital Payment Token (DPT) transactions. This article is for informational purposes only, and is not an offer nor a solicitation to invest in DPT, securities, funds, partnership interests or other investments or funding or purchasing loans. It is the user's sole responsibility to conduct due diligence and research extensively into each DPT and platform, and understand that the volatility and unpredictability of the price of DPT may result in significant loss over a short period of time. No information on Hodlnaut should be considered to be business, legal, financial or tax advice regarding the use of Hodlnaut. Users should consult their own legal, financial, tax or other professional advisors before using Hodlnaut. Please refer to our website at https://www.hodlnaut.com/tos for the full Terms of Use.

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