The Royal Mint is set to launch a digital gold offering which will be traded on blockchain – to be made available around mid-2017.
Royal Mint collaborate on launch of blockchain based digital gold
The blockchain-based gold product, called Royal Mint Gold (RMG) and in collaboration CME Group, the diverse derivatives marketplace, will transform the way traders and investors trade, execute and settle gold, said a statement. One RMG will equal one gram of physical gold.
The 1,000-year-old Royal Mint, which is owned by HM Treasury, will issue RMG as a digital record of ownership for gold stored at its highly-secure on-site bullion vault storage facility.
CME Group will develop, implement and operate the product’s digital trading platform. Taken together, this new service will provide an easier, cost-effective and cryptographically secure alternative to buying, holding and trading spot gold.
“Gold still remains a relatively expensive commodity to invest in; there are costs associated with vaulting or management of the physical assets and as a result is often referred to as a negative return investment,” says Vin Wijeratne, CFO of The Royal Mint.
“The Royal mint will place large gold bars into its secure vaults. We will then create the equivalent amount of RMG digitally and the signed ownership of these on the blockchain. Once this is done holders of RMG will be able to trade them peer-to-peer using a new platform that has been created and will be run by CME Group.
“A good way to look at this project is very similar to pay-as-you-go products in mobile telephony. So in other words, unless you physically buy or sell the product itself, there is no charge or ongoing charge for holding it. If you look at gold investment products that are out there, every single one of them charges some sort of annual management fee.
“By creating RMGs anyone can benefit from economies of scale usually reserved for larger investors. RMGs will be available to buy and sell through multiple intermediaries and trusted parties.
He said the addition of a blockchain-type system will mean tracking ownership in near real time and therefore some costly administration attached to this process can be dispensed with. In terms of technical detail about the blockchain design itself, not much information is is being released at this time.
Sandra Ro, digitisation lead at CME Group, said: “This is going to be a permissioned network. We will have all known actors and there will be a mechanism by which validators will validate the transactions. We will go into further details about exactly how a lot of process will work and the finer details around the platform at a later date.”
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