We audit popular gold tokens against five trust tests, then compare them with BTC ETFs and native BTC settlement.

Binance founder Changpeng Zhao recently claimed tokenized gold is not on-chain in response to Peter Schiff arguing tokenized gold can outcompete Bitcoin.

Saying the obvious. Most people “in crypto” know this, most people “not in crypto” may not understand yet.

Tokenizing gold is NOT “on chain” gold.

It’s tokenizing that you trust some third party will give you gold at some later date, even after their management changes, maybe decades later, during a war, etc.

It’s a “trust me bro” token.

This is the reason no “gold coins” have really took off.

– @CZ_binance

Start with the ledger.

When a user self-custodies BTC, the Bitcoin base layer confers final settlement for the thing the user actually owns, spendable BTC.

For a U.S. spot BTC ETF, the share settles at the securities depository on T+1, while the fund’s underlying BTC settles on the Bitcoin network inside the custodian’s wallets.

For tokenized gold, the public chain settles the token, but legal title to metal sits in an issuer’s vault and documentation stack, and redemption requires the issuer, the custodian and physical logistics.

Redemption paths make the distinction concrete. BTC can be withdrawn permissionlessly by paying a fee and waiting for confirmations.

By contrast, PAX Gold sets a bar-sized threshold for direct physical redemption, generally at around 430 ounces, and smaller redemptions are routed through partners and may take multiple business days depending on method.

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Author: Gino Matos