Draw a Venn diagram of gold bugs and bitcoin fanatics and the odds are that you'd pretty much have a perfect circle. So the Royal Mint's plans to back gold with the technology that lies behind the anarchic cryptocurrency should get both camps salivating.
The 1,000 year-old institution, along with derivatives trading platform CME Group, hopes to bring gold investment bang up to date by using blockchain technology to underpin investment in gold bullion, called "Royal Mint Gold" (RMG), held in the Mint's vaults.
Traditional methods of trading in gold can be cumbersome, time-consuming and costly. By using blockchain, the Mint is hoping to reduce the time it takes to settle trades, remove a whole tier of administration, and cut costs dramatically. Trades can be made 24 hours a day, 365 days a year and can be settled almost immediately, and it will createa permanent, cryptographically secured record of all transactions.It is hoping RMG will compete with other physical gold investment services such as Bullion Vault, and alternatives such as precious metals ETFs.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Due to launch in the first half of this year, the Mint will initially store $1bn of 400oz bars in its vaults, and convert them into one-gram digital tokens known as "RMG"s, which investors will be able to trade on a peer-to-peer basis. There will be no annual management fee, and no storage fee. The Mint aims to make money by charging a small fee on trades.
Interest in blockchain has been growing for a few years now. And if the buzz at this week's Blockchain Expo in London is anything to go by, it's gathering critical mass. If the Royal Mint's product does take off, it could mark the point at which the distributed ledger finally begins to make it out of the realms of "next big thing" and into the real world, transforming itself from "the technology that underpins bitcoin" to the technology that underpins much of the world's commerce.
-
Barclays begins paying up to £100 compensation to customers after banking outageBarclays will pay up to £7.5 million in compensation to customers after its banking services were disrupted by an IT outage
-
Review: Shangri-La Paris – an ode to the world’s best foodNatasha Langan enjoys fine French and Chinese cuisine at the Shangri-La Paris
