A recent report by the Blockchain Research Lab examines the advantages of tokenised gold versus current leveraged paper gold platforms, predicting that tokenisation will prompt gold investors to exit the legacy system and destabilise global gold institutions.
According to Ingo Fiedler, co-founder of Blockchain Research Lab, as the demand for physical gold grows from both nations and private investors, the current gold trading platforms, which work as a highly leveraged fractional reserve system, might collapse under the weight of physical delivery.
While geopolitical elements can also unwind this crisis, Fiedler believes that tokenised gold can become a structural menace to today’s gold establishment, as it will undoubtedly shift more investors due to its trading and security advantages.
Fiedler stated:
Over the past years, central bank accumulation and repatriation have steadily undermined the foundation of the unallocated model of bullion banking. The advent of tokenised gold products like Tether’s XAUt will accelerate this trend.
Looking Forward
Financial analysts predict that tokenisation will take over the finance world by storm, and gold is no exception, but given the levels of leverage in gold markets, the outcome of this shift could be disastrous.
