If you want to hold gold, are gold tokens a good option?

On April 22, 2025, the gold market once again became the focus of global investors. Spot gold prices have soared by over 20% this year, reaching a historic high of $3,499.92 per ounce today. Meanwhile, the gold token market has emerged rapidly. According to CoinGecko data, the "gold token" sector's trading volume exceeded $330 million in the past 24 hours, with PAXG (Paxos Gold) leading with a single-day trading volume of $194 million. In this era where tradition and technology intersect, gold tokens - a product combining ancient precious metals with blockchain technology - are attracting investors with their unique charm. But the question remains: Is a gold token really a good choice for holding gold? Let's explore this and explain it in detail. [Rest of the translation follows the same professional and precise approach, maintaining the specific terminology translations as instructed]

• Strict Regulation: Paxos is a limited-purpose trust company authorized by NYDFS, approved in 2015, and subject to strict capital reserve, compliance review, and operational monitoring. PAXG was separately approved by NYDFS in July 2019, not considered a security or futures contract, avoiding additional regulatory complexity. The Paxos white paper emphasizes that customer assets are isolated from company assets, and even if Paxos goes bankrupt, the gold bars held by PAXG do not belong to the company's property, ensuring "bankruptcy isolation".
• Third-Party Audit: Top accounting firms like KPMG audit the 1:1 correspondence between PAXG tokens and gold bars monthly. The "PAXG Redeemable Asset Report" as of February 28, 2025, reviewed by KPMG, confirmed that 209,160 tokens matched an equivalent amount of gold bars, complying with AICPA stablecoin reporting standards (although PAXG is commodity-backed rather than fiat-backed). Gold bars are purchased from StoneX (regulated by SEC, CFTC, etc.) and stored in LBMA-certified vaults like Brink's, with impeccable physical security.
• Smart Contract Security: PAXG's ERC-20 contract is based on the Paxos Standard (PAX) contract, audited by multiple security institutions like Nomic Labs, ChainSecurity, Trail of Bits, and CertiK between 2018-2019. CertiK uses mathematical verification technology to ensure code has no vulnerabilities. Paxos implements EIP-712 signature verification to prevent signature attacks, and the BetaDelegatedTransfer function allows third parties to pay Gas fees, enhancing user experience while limiting operations to authorized parties, reducing risks.
• Transaction Monitoring: Paxos uses ComplyAdvantage and Chainalysis tools to monitor platform and on-chain transactions in real-time, preventing fraud and money laundering. Ethereum's open ledger makes all PAXG transactions traceable, and anyone can verify token circulation through Etherscan (contract address: 0x45804880De22913dAFE09f4980848ECE6EcbAf78).
• Compliance Freeze Mechanism: To meet regulatory requirements, the PAXG contract includes an AssetProtectionRole, allowing tokens at specific addresses to be frozen or confiscated under legal compulsion (such as a court order). Paxos promises to use this function only in extremely rare circumstances, and frozen addresses are transparent (queryable through the isFrozen function).

Real-World Appeal

PAXG's design is not only technologically advanced but also close to investor needs. Bitcoin enthusiasts appreciate its decentralized attributes, aligning with the "no-liability" concept of crypto assets; traditional gold investors value its zero storage fees and high-quality gold bar endorsement; retail investors are attracted by the low threshold of just $15. In April 2025, PAXG's daily trading volume of $194 million proved the market's recognition of its liquidity and trust. Paxos predicts that PAXG will shine in lending platforms, allowing investors to earn interest by pledging PAXG, adding a revenue stream to gold investment.

Of course, PAXG is not flawless. Ethereum gas fees can spike during network congestion, and exchange hacker risks (like the billions stolen from a platform in 2022) remind investors to use hardware wallets (like MetaMask). Paxos' centralized custody might also make "purist" decentralization advocates hesitate. However, compared to the cumbersome processes of traditional gold markets and the non-physical nature of ETFs, PAXG's mechanism design and security guarantees are undoubtedly a new benchmark for gold in the digital age.

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However, paper gold also has limitations. The biggest problem is the inability to exchange for physical gold, which cannot meet physical needs in extreme cases. The bid-ask spread of banks (0.8-1.2 yuan/gram) is also high, making frequent trading costly. Moreover, some banks have limited trading hours, potentially missing important fluctuations in the international market.

Compared to paper gold, PAXG offers more flexibility in physical redemption and global trading, suitable for investors with an international perspective. However, its blockchain attributes and US dollar pricing might not be "down-to-earth" for mainland Chinese investors, and it requires operation through a crypto exchange with a steep learning curve. For conservative domestic investors, paper gold might be a more worry-free choice.

4. Gold Tokens vs. Gold Futures and Stocks: High-Risk "Adventurer" Choice

If you are a risk enthusiast, gold futures and gold-related stocks might be your "playground". Gold futures (such as COMEX gold futures) amplify returns through leverage, with only a few hundred dollars of margin needed to trade 1 ounce of gold. The highly volatile market in 2025 attracts speculators. Gold mining stocks (like Barrick Gold) may outperform gold prices due to profit growth from rising gold prices.

But high returns come with high risks. Futures leverage could lead to liquidation from a single gold price pullback, and the high volatility of gold prices near historical peaks in April 2025 further increases risk. Gold stocks are affected by company operations, cost management, and other factors, with volatility far exceeding gold prices. The case of a mining company's stock plummeting 20% due to a production accident in 2023 serves as a warning.

PAXG and paper gold are more like "stable players". They are directly linked to gold prices, with controllable volatility, suitable for investors seeking hedging rather than speculation. Compared to futures and stocks, PAXG's blockchain risks seem much milder, but also lack the excitement of high leverage.

The "Timing and Conditions" for Gold Tokens in 2025

The market environment in 2025 provides an excellent stage for gold tokens. Gold prices reached historical highs, with the gold token market size breaking through $1.3 billion, and PAXG's single-day trading volume of $194 million demonstrates its liquidity. Global economic uncertainty - from the Federal Reserve's monetary policy negotiations to geopolitical undercurrents - highlights gold's hedging attributes. Meanwhile, the maturity of the crypto market has transformed gold tokens from a "emerging novelty" to a mainstream choice.

However, PAXG's success is not without concerns. The overall downturn in the crypto market (Bitcoin dropped over 11% annually) might cause PAXG prices to temporarily deviate from gold prices, and exchange liquidity risks cannot be ignored. The lesson from an exchange suspending withdrawals due to a liquidity crisis in 2024 reminds us of the technical pitfalls behind blockchain convenience.

After all this, is a gold token right for you? The answer depends on your investment goals, risk appetite, and operational habits:

• Are you a small investor? PAXG's 0.01 ounce ($15) threshold is much more accessible than physical gold's 1 ounce ($3000), and paper gold (0.01g, 6 yuan) is also good, but PAXG offers more flexible global trading.
• Do you prioritize liquidity? PAXG and gold ETFs' second-level trading far surpass physical gold's "turtle-speed" settlement, with PAXG's 24/7 trading leading ETFs.
• Do you want physical gold? PAXG supports physical gold redemption, giving you "real gold", while ETFs, paper gold, and futures only provide "digital returns".
• Are you familiar with blockchain? PAXG requires you to use crypto wallets (like MetaMask) and exchanges, while paper gold and ETFs are more suitable for "tech novices".
• Are you risk-averse? Physical gold and paper gold have the highest safety, PAXG's blockchain risks and ETF market fluctuations are secondary, while futures and stocks carry the most risk.

Investment Advice: Let Gold Tokens Work for You

If you decide to try gold tokens, here are some practical suggestions:

1. Choose a reliable platform: Prioritize top exchanges like Binance and Kraken, and check their regulatory compliance and historical record.
2. Protect asset safety: Store PAXG in hardware wallets, avoiding long-term custody on exchanges to reduce hacking risks.
3. Pay attention to transaction costs: ETH Gas fees can surge, avoid trading during network peaks, or consider gold tokens on other low-fee blockchains (like Tether Gold).
4. Diversify investments: Don't put all funds into PAXG, pair it with physical gold or ETFs to spread risk.
5. Keep an eye on gold prices: Gold prices were high and volatile in April 2025, recommend gradual entry to avoid chasing peaks. Pay attention to Federal Reserve interest rate expectations and geopolitical events, which could be "wind vanes" for gold prices.

Gold tokens are a perfect collision of traditional precious metals and blockchain technology, making gold investment lighter, more flexible, global, and accessible to small investors. In the 2025 gold rush, PAXG became a "new favorite" with its high liquidity, physical redemption, and low threshold. But it's not flawless: blockchain risks, custody dependence, and transaction costs remind us that all investments require rational treatment.

If you are a new-generation investor seeking convenience and liquidity, gold tokens might be your "golden key". If you value safety and tangibility, physical gold or paper gold might suit you better. Regardless of which path you choose, gold's charm remains unchanged - it is not just a symbol of wealth, but a safe haven that transcends time and risk.

So, which way are you ready to embrace gold?