Gold, pre-1500 BC, was an ordinary sculpting material used in manufacturing images and fashion accessories. At the end of 1500 BC, the ancient empire of Egypt which sat over abundant gold in Nubia made gold the first official medium of exchange for international trade.
Ethereum blockchain technology, on the other hand, allows investors to create smart contracts which are automated agreements between two or more parties in the event of an exchange of currencies or commodities.
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A connective platform like Ethereum Code has a huge impact on the gold market as it serves as a decentralized platform for trading gold using the Ethereum blockchain. It will help improve security and reduce transaction costs, encouraging more people to invest in gold.
In this article, we will highlight how the advent of the versatile Ethereum blockchain technology improves the global exchange of gold.
It would make it easier for investors to track gold’s correct origin and ensure that they buy gold from a reputable source. Overall, ethereum has the potential to bring significant improvements to the gold market, which could make it a more attractive investment option for a wide range of investors.
The Effects of Ethereum on the Gold Market
Security
Blockchains like Ethereum provide a higher degree of exchange and trade security for investors as they don’t require a third party to authenticate ownership of digital assets. All the absolute security resides with the original owner of the asset.
Pricing
While many different factors can affect the price of gold, a fusion with Ethereum’s decentralized nature means that the price of your asset is not subject to the same economic and political forces as traditional fiat currencies. As a result, it makes it an appealing investment for those looking to hedge against inflation or other economic uncertainties.
Transparency
Ethereum’s blockchain technology uses a decentralized ledger that’s shared by everyone in the network. This ensures a single, transparent, and undisputable record of all transactions ever done.
Multi-party Smart Contracts
Ethereum’s multi-party smart contracts – an additional layer of functionality that’s able, for example, to verify the serial numbers of physical gold bars that have been allocated to specific digital holdings.
Furthermore, it can use Ethereum’s innovative contract technology to create digital gold tokens backed by actual gold reserves. And because they can trade those tokens on decentralized exchanges, they offer a more efficient and secure way to trade gold.
Cost of Logistics and Storage
Token holders can retrieve their physical gold on-demand and at any time from physical Swiss gold banks e.g. SEBA Swiss Bank.
The bank, on receiving the holder’s instruction to redeem their physical gold contacts its partner-refineries, without incurring the transport and storage fees that are levied by traditional digital gold platforms such as BullionVault.
This is possible because the holder has not actually kept physical golds which will require extra cost to manage. Each token represents 1g ($57) of the metal and is divisible to 4 decimal places.
Conclusion
The only downside to this innovative way of tapping into the gold industry is the neglect of the actual gold miners. Ethereum’s Smart contracts and decentralized ledger makes it so convenient for investors to trade in gold without going through the traditional channels.
Overall, Ethereum has the potential to become a powerful tool for investors interested in gold, and its impact on the gold market is expected to grow over time.
Whether you’re looking to invest directly in gold or use Ethereum technology, there are many ways to take advantage of this dynamic new asset class.
Information contained on this article are just that – a piece of information. You should not use this to make financial decisions and we highly recommended you seek professional advice from an authorized expert.
