Binance founder CZ has recently taken a jab at Peter Schiff’s new tokenized gold plan.
Schiff has long been a vocal critic of cryptocurrencies, but he is now turning to blockchain to make gold more accessible. While tokenized gold may seem like a good idea given gold’s recent performance, CZ’s remarks suggest there may be more to the story than what meets the eye.
“Tokenised Gold” Is Not Truly On-Chain
In a recent interview, gold proponent and Bitcoin critic Peter Schiff revealed that he is launching a tokenised gold product.
“Ideally, the one thing that makes sense to put on a blockchain is gold because it will work and it will do all the things that Bitcoin promises but can never do,” he said. He also plans to offer a debit card linked to users’ gold or silver holdings.
However, CZ pointed out that tokenized gold is not truly “on-chain” gold. He explains that it just means trusting a third party to actually deliver the gold in the future. “Most people ‘in crypto’ know this, most people ‘not in crypto’ may not understand yet,” he added.
CZ highlighted the risks inherent in this setup. The promise of gold could be affected by changes in management, long-term delays, geopolitical crises, or even wars.
Why Gold Tokens Have Not Gained Traction
CZ explained that these risks are why gold-backed tokens haven’t really caught on, calling them “trust me bro” tokens rather than a real blockchain-based asset.
The reliance on third-party custodians undermines its appeal. This also goes against one of crypto’s core principles: decentralization and eliminating the need to trust middlemen.
The tokenised gold market cap is currently over $2.4 billion, with only PAX Gold (PAXG) and Tether Gold (XAUt) having crossed a $1 billion market cap. Earlier this week, CZ predicted that Bitcoin could eventually overtake gold in market value.
Could Gold’s Drop Trigger a Bitcoin Sell-Off?
Schiff has faced criticism in the crypto community after gold recently dropped below $4,100.
He had previously suggested that gold’s recent sharp drop might not spark a rotation into Bitcoin as some expected. Instead, he suggested it could trigger a broader sell-off in Bitcoin, noting that Bitcoin-related stocks are already seeing significant outflows.
Meanwhile, Bitcoin is recovering and is currently trading at $109,483, up 1.5% in the past day while gold is currently trading at $4,114, up 0.36%.
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FAQs
Tokenized gold is a digital token on a blockchain that represents ownership of a specific amount of physical gold held by a third-party custodian.
The market is relatively small, with a total value of around $2.4 billion. Only two major tokens have surpassed a $1 billion market cap, indicating limited adoption.
Risks include relying on the custodian’s promise, potential management changes, long-term delays in redeeming gold, or the gold being affected by geopolitical crises.
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