The majority of financial institutions worldwide have spoken out against the booming cryptocurrency market. But not all of them are so sceptical.
The Royal Mint, which produces the United Kingdom’s currency and holds gold, has joined the cryptocurrency rush by creating a gold-backed cryptocurrency.
This digital coin will be known as Royal Mint Gold (RMG), and will be backed by the physical gold that the mint holds in its chest.
The Royal Mint sells bullion through its business arm Royal Mint Bullion, and officials believe that the introduction of blockchain technology will make the transaction process simpler for both the seller and the customer.
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Speaking to Express.co.uk, Tom Coghill from the Royal Mint’s RMG division said: “We already sell physical gold through our Royal Mint Bullion business and we sell coins and bars. In this sense what we’re doing here is simply making that a digital business and allowing for our clients to be able to hold gold for the first time on a blockchain basis.”
As the Royal Mint’s cryptocurrency will be backed by physical gold, the coin will not be susceptible to high volatility like others in the crypto market. The value of one RNG will be equivalent to one gram of gold.
Mr. Coghill added: “The difference between what we’re doing and what other crypto digital assets is that we’re a physical tangible asset. One gram on our blockchain represents one gram physically in our vault. So it’s real gold you’re holding when you’re holding our RMG.”
“Gold has probably had an argument that it’s been a store of value for 6,000 years, bitcoin’s a bit younger and the future of bitcoin is uncertain,” concluded Mr. Coghill.
The Royal Mint entered into a partnership with CME Group to bring RMG into the market. BitGo, a well-known blockchain firm, was responsible for the development of RMG’s multi-signature wallet.
The Royal Mint is not the only institution to introduce a bullion-backed cryptocurrency. Earlier this month, Perth Mint, Australia’s largest precious metal refinery, announced that it is developing a gold-backed cryptocurrency to make the process of precious metal trading easy and instantaneous. Moreover, a series of gold-backed ICOs are also planned for this year.