Australia’s Biggest Gold Refinery Plans to Launch a Cryptocurrency

With the exploding growth of cryptocurrencies in the last few years, many analysts have believed that virtual digital currencies might emerge out as the next asset class. However, a few economist have long argued that cryptocurrencies are not backed by any strong currency or commodities and hence their value cannot be determined in the true sense.

Australia’s biggest gold refiner ‘Perth Mint’ has announced to launch a cryptocurrency which will be backed by physical gold. The Australian Broadcasting Corporation reports that Richard Hayes, Chief Executive of Perth Mint believes that the company has identified a great opportunity to “bring[ing] investors back to precious metals after a boom in alternative investments such as cryptocurrencies. I think as the world moves through times of increasing uncertainty, you’re seeing people look for alternate offerings.”

Mr. Hayes further added that “…. 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.”

Mr. Hayes explained that a cryptocurrency backed with gold will potentially emerge as an efficient tool of investment rather than the existing virtual currencies which exhibit a lot of volatility. Moreover, Hayes also said that the cryptocurrency, backed by the blockchain technology, will also give investors the potential benefits of fast and efficient settlements.

Mr. Hayes said that unbacked cryptocurrencies “rely on everyone believing that there’s something behind it while that “us[ing] precious metals to back something […] allied to blockchain […] retains its intrinsic value.”

He further added: “With a crypto-gold or a crypto-precious metals offering, what you will see is that gold is actually backing it. 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.”

Whether or not the new gold-backed cryptocurrency will sustain in this competitive market is for investors to decide. However, this is not the first-of-its-kind attempt to have a gold backed cryptocurrency or backed by any other commodity, as a series of similar plans are already lined up this year.

In the past few year, Perth Mint has made significant advances to allow retail investors to participate in the trading process of precious metals. The company has also introduced an online trading platform through which investors/traders can buy and sell precious metals round the clock.

The launch date for the project is yet not finalized but Hayes expects to make it happen in the next 12-18 months.