Coming up with more use cases for blockchain technology is not necessarily difficult, although not every use case requires a distributed ledger either. For quite some time now, we have seen interesting synergy between the blockchain and precious metals industries. Emergent Technology Holdings wants to encode the gold supply using blockchain technology later this year. That’s a very ambitious goal, although one has to keep the big picture in mind at all times.
Embedding Gold on a Distributed Ledger
It is quite an ambitious goal by Emergent Technology Holdings, to say the very least. No one expected anyone to digitize gold using blockchain technology. This US-based financial technology company wants to digitally encode the gold supply chain using distributed ledgers. This does not mean all of the world’s gold will be turned into digital tokens all of a sudden, although that is one of the many potential long-term outcomes.
More to the point, the company will create a digital token backed by physical gold. To most people, this will not sound all that unique, because it really isn’t. Several companies have attempted to do the same and ultimately didn’t succeed or failed to gain any traction. Whether or not Emergent Technology Holdings will fare any differently in this regard remains to be seen. After all, not everything in the world needs to be tokenized these days.
What makes the venture worth paying attention to, however, is that the company will digitally record every stage of the gold supply chain. This new project will bring a lot more transparency to the industry as a whole. Moreover, the company will guarantee the provenance of each piece of gold, certify that it was sourced in a responsible manner, and verify its purity. All of this sounds like something the U.S. Mint should be taking care of, rather than a third-party fintech company.
The digital tokens in question will be known as G-Coins, and they are backed by physical bullion. This is done through a partnership with Yamana Gold, a company publicly listed and traded on the New York Stock Exchange. One token will be the equivalent of one gram of responsibly sourced gold and will be pegged to the spot price of bullion at all times. These tokens can be used for investing, payments, the transfer of wealth, and so forth.
While it’s true we have seen a lot of interest from companies in using blockchain technology in their supply chains, it remains to be seen how successful this venture can really be. Creating a completely new ecosystem most people will never give a second glance to is a very bold move, and it remains to be seen whether or not this solution can gain any momentum moving forward. The focus on responsibly sourced gold is quite novel, but it may not necessarily be enough to set this project apart.
All of this goes to show the blockchain industry continues to make inroads in various sectors. For the longest time, people have been calling Bitcoin the new digital gold. It now seems the underpinning technology of Bitcoin will actually help digitize the supply chain of gold. How all of this will play out exactly has yet to be determined, but the concept appears solid. Bringing more liquidity to the bullion industry is never a bad thing.