Back to the Gold Standard?

It is somewhat remarkable to see so many companies and service providers show a desire to go back to a form of money tied to physical gold. Although the gold standard was removed from the equation many decades ago, there appears to be a chance it will make a comeback. Whether that will be through digital currencies or other means, remains to be determined. For the Perth Mint, a digital currency is seemingly the way to go.

Earlier this week, the institution introduced its own currency, known as the Perth Mint Gold Token. It may not be the catchiest name by any means, but it does serve a purpose. This currency is tied directly to a real commodity in the form of gold. Those god reserves are located in a physical vault owned by the Perth Mint. It is a sensible business model, and one that may help put digital currencies on the map as a whole.

What is its use?

There are several reasons as to why the Perth Mint decided to take this course of action. Although the trading of gold has been going on in physical form for some time now, it is not all that easy to trade it in a digital format. Several service providers exist, but it seems investors and traders have waited for a legally recognized entity to get in on the action. The Perth Mint is a major institution in Australia, thus their venture will undoubtedly attract a lot of attention.

Clients who use the Perth Mint Gold Token can exchange it to cash through a mobile application. The mint also confirms the value of the currency will be certified. Users can have the physical product – i.e. the gold linked to this digital currency – delivered to their door for safekeeping. In doing so, the Mint instills a lot of trust, as the user is not reliant on their vault to move money around. All of the tokens are tracked using a proprietary blockchain, which will allow for instantaneous transactions between users at all times.

An Interesting Venture

Regardless of how one feels about this new digital currency, it sends an interesting signal to the financial sector. Gold often gains popularity during times of financial instability and looming recession. It is no coincidence the Perth Mint decides to embark on this journey at this exact moment. There has been plenty of volatility across all financial markets, and investors have flocked to gold as a result. By digitizing this commodity, it suddenly becomes a lot more accessible for everyone to get their hands on bullion, at least in Australia.

Image(s): Shutterstock.com