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Gold Bank, a leading buyer and seller of gold in the UK, assures consumers that physical gold is still the most popular option for investors, offering less risk compared to the new trend of tokenised gold.
While tokenised gold might be easier to buy and sell in small amounts, moving instantly, making it a convenient way of investing, it can be referred to as gold in a digital wrapper.
Explaining what tokenised gold is for those new to investing, Faisel Ali, Gold Bank London’s Founder and Managing Director, said, “Tokenised gold is the blockchain-based version of owning gold. The tokens are backed by real metal held in a vault, but your ownership is recorded digitally. The difference is transparency. You can see transactions on the blockchain but you’re still trusting someone else to hold the gold.
‘In theory, every token should be backed 1:1 by physical gold. Some products though, including some cryptocurrency ‘gold’ tokens that only track the price, aren’t actually backed by a real asset. That’s why, no matter how convenient, nothing replaces physical gold – and it hasn’t for thousands of years – whether it’s stored by a trusted provider or kept safely under your own roof.”
Purchasing physical gold removes all of the risk when investing in the yellow metal, with that being the main difference between owning gold and tokenised gold.
Commenting on the current tokenised gold market, Ali said, “It is still small, a few billion dollars globally, but growing fast. It’s early days and most of that interest is from people already comfortable with cryptocurrency. The traditional gold market is still many trillions larger, so tokenised gold has a long way to go before it’s anything more than a niche.
“The reason tokenised gold is a trend right now is because it feels like crypto, but with something solid behind it which is a benefit over normal cryptocurrency. People want safety and a hedge against instability, but they also want convenience. So tokenised gold sits in the middle.
“It’s bringing new investors into the space, which is great for awareness, but when things get shaky can you trust the people who have tokenised the gold? The serious money still moves into physical gold – which you can see and hold yourself, in the form of bars or coins – from trusted and established companies such as Gold Bank.”
For more information and advice on buying and storing gold, visit goldbank.co.uk.
