The 'Tokenized Gold' market, which moves physical gold onto a blockchain, is showing rapid growth.
As of recently, the total market capitalization of tokenized gold has surpassed $4.2 billion, a 147% surge in just six months. Gold, a traditional safe-haven asset, is seen as establishing itself as a key player in the digital asset market.
The market structure is essentially a two-party system.
Tether's gold-backed token XAUT and Paxos' PAXG account for approximately 90% of the total market. As tokenized gold, a new asset class, rapidly grows, funds are flowing into leading projects that prioritize reliability and liquidity.
Both XAUT and PAXG are structured with one token representing one troy ounce of physical gold. The gold is stored in a professional custodian that meets London Bullion Market Association (LBMA) standards, and investors can directly hold and transfer gold through a blockchain wallet. Unlike gold ETFs, XAUT offers 24-hour trading, and the freedom to trade in small amounts and transfer across borders.
Analysts argue that this rapid growth cannot be simply attributed to a digital asset fad. The combination of increased gold purchases by global central banks, heightened geopolitical risks, and the need to hedge against dollar volatility has fueled growing interest in gold itself, and this trend has expanded to include blockchain-based products. In particular, the potential for tokenized gold to be used as collateral in stablecoins and DeFi ecosystems further enhances its strategic value.
While Bitcoin is often referred to as "digital gold," the market focuses on tokenized gold, which is essentially an on-chain representation of physical gold. Its relatively low price volatility and clear ownership rights over the physical asset make it an attractive alternative for institutions and conservative investors.
The surge in tokenized gold's market capitalization demonstrates that real asset tokenization (RWA) is no longer an experiment. With RWAs expanding from gold to bonds, commodities, and even real estate, tokenized gold is establishing itself as the most realistic bridge between digital finance and traditional assets.
