While economist Peter Schiff has renewed his criticism of Bitcoin (BTC), he announced at the same time that he is working on launching a tokenized gold app. What’s the story?
Peter Schiff is developing his tokenized gold app
On Wednesday, speaking with ThreadGuy on CounterParty TV, American economist Peter Schiff—a long-time critic of Bitcoin—announced that he is working on creating a tokenized gold app:
You’ll be able to buy gold through a mobile app. The gold will be stored in a vault, and you’ll then be able to easily transfer ownership of your gold to friends and family or exchange it for physical gold.
In short, he lists all the features the platform could offer, including a payment card backed by this tokenized gold and the ability to redeem it for real gold.
Reacting to the announcement, Changpeng Zhao (CZ), the founder of Binance, took a critical view of the idea:
It’s obvious. Most people “in” the cryptocurrency world know this, but most people “outside this world” may not understand it yet. The tokenization of gold is NOT “on-chain” gold. It’s a symbol that you trust a third party to give you gold at a later date—even after a change in management, perhaps decades later, during a war, etc. It’s a sign that says, “Trust me, bro.” That’s why no “gold coin” has really taken off.
In short, tokenized gold has advantages and disadvantages that are essentially similar to those of a gold ETF. As such, it’s true that special attention should be paid to how the financial vehicle is collateralized by the underlying asset and to any guarantees in place in case of problems.
In addition, tax issues may arise depending on the jurisdiction, particularly in France, where several tax treatments are possible, depending on whether the gold is considered jewelry, paper gold, or if the “real capital gains” regime applies.
To date, the market capitalization of gold-backed stablecoins stands at $3.87 billion, the vast majority of which is represented by Tether’s XAUT and Paxos’s PAXG:
Ranking of gold-backed stablecoins
Meanwhile, an ounce of gold is trading at $4,116, after hitting an all-time high of over $4,380 on Monday.
Returning to Peter Schiff, it’s worth noting that the economist also took a jab at BTC, for which he continues to predict an inevitable crash:
I still think it will eventually be worth nothing, so I don’t think I was wrong about that. What I was wrong about was underestimating the public’s gullibility in buying it.
Before plummeting into the abyss that many of its detractors predict, BTC is still trading at $109,400 at the time of this writing, up 1.2% over the past 24 hours.
