Last month, Infinigold announced the launch of a digital token, The Perth Mint Gold Token, backed by gold stored in the vaults of Australia’s Perth Mint, a world-leading precious metal refinery. We spoke with Andreas Ruf, the CEO of Infinigold, about working with Perth Mint to launch the token.
What is surprising about PMGT?
Why is the tokenization of gold so important to the gold industry?
Many would make the argument for gold being the greatest form of money ever to have existed. It has certain properties that, for thousands of years, have caused societies to unite and grow around it, and even to this day, is hoarded by investors as a safe haven asset to hedge against traditional instruments and fiat currencies.
Tokenising gold allows individuals and institutions to store cryptographically-assured proof of ownership over a set amount of gold, held by the issuer in a vault. This enables them to easily store, purchase, sell or transfer gold without needing to take physical custody––though should they wish to, the option is there.
It is combining the best of 2 worlds: physical gold, trusted and proven as a safe storage of value for 5000 years with government guarantee and blockchain technology, providing immutable and secure transactions. This is not only making gold accessible to a new generation of investors, but also creates an infrastructure for the safe storage and transfer of value accepted across different cultures that may be used as the basis for new and upcoming services: as collateral for loans, stablecoins, insurances, etc.
Is this a new stablecoin competitor? If so, could you speak to the ways in which this is a stablecoin competitor and how it differentiates itself?
Stablecoins have many use cases, most notably, price stability. While USDT remains the stablecoin of choice in terms of trading volumes, there are significant questions over its future given their lack of transparency. Over the past 18 months, numerous high-quality stablecoin projects have successfully launched, such as True USD and USDC, but the common denominator with the majority of these stablecoins is that they have a USD backing, which in the trading world is a “long US dollar position”.
Perth Mint Gold Token is offering a differentiated product in that it’s a gold token that can be converted into the same gold that the institutional gold market trades, i.e a “long gold position”. PMGT is offering a stablecoin backed by physical assets that is independent of fiat currencies. A noteworthy point is that PMGT is convertible into GoldPass certificates, which means that once a user is in the digital certificate world they are also in the liquidity pool of the institutional gold market.
What has the dynamic between blockchain and gold over the years? Bitcoin was almost seen as digital gold, but now Ethereum technology is bringing that full circle and combining the two. Could you speak to that dynamic?
Bitcoin shares much in common with gold––it’s scarce, difficult to produce and impossible to replicate. Many involved in the space accumulate it for the same reason that gold stackers do: to hedge against fiat.
Aside from that, they’re radically different assets. In particular when comparing the historic price stability: Bitcoin is a highly volatile and speculative asset that has only been around for 10 years whereas physical gold, despite movements in its market rates, has been used as a safe haven asset to securely hold and preserve value provides for thousands of years.
With PMGT we are not trying to compete with Bitcoin – rather, we’re simply leveraging its technology to make a historically sound asset more accessible in the digital age.
How was it working with the Perth Mint?
Perth Mint is a strong innovator in the development of new gold investment products. Their mission to promote and make Australian gold easily accessible to a global audience is driving their commitment to embrace new technologies and enter the digital markets by offering modern products to a new generation of investors.
This commitment, combined with Perth Mint’s unique experience in physical gold trading and storage, has made working with The Perth Mint an incredibly rewarding and productive collaboration.
For 120 years, The Perth Mint has been striving to be a global leader in the precious metals industry, especially when it comes to the quality of their products. Their expectations are no less in the digital world, which often meant that their requirements have been challenging, but at the same time inspiring. And PMGT as the outcome of this project is setting the bar the digital asset space.
Could you speak to their openness to innovate?
This wasn’t our first collaboration with the Mint – we had previously developed and are operating the GoldPass platform for them (which PMGT is actually an extension of). It’s refreshing to work with traditional financial heavyweights that appreciate the role of technology in enhancing their industry, and the Perth Mint is certainly keen to continue to innovate with us.
Could you speak to the process of working with EY and the intersection of multinational professional services firm EY and blockchain generally, as it relates to your experience?
Right from the start of the project the aim was to set a new standard of trust, credibility, creditworthiness and asset protection within the blockchain ecosystem. This is why we engaged the team at EY to assist us in implementing strong procedures and controls around the PMGT platform to put in place effective management of digital assets risks from the beginning. EY with their expertise in both new blockchain technology, as well as the development of large scale high value platforms, have challenged and guided us to develop and put in place very effective and appropriate controls.
What led you to found InfiniGold?
InfiniGold is a Rozetta Ventures company and part of the RoZetta Group (www.rozetta.com.au). Established in 2001 as the Australian Government-backed Capital Markets Cooperative Research Centre (CMCRC), RoZetta’s Industrial Ph.D. Program is the world’s leading program in the financial markets sector. At the CMCRC, we had long been following the evolving distributed ledger technology. We had also developed our own digitisation platform digi.cash used to issue electronic cash.
These developments, paired with our appreciation for gold and a love for technology, had led us to start InfiniGold, where we saw an opportunity to extend the capabilities of the Perth Mint’s offering into the digital and blockchain world.
What are some of the biggest challenges bridging the gap between an old financial market and digital assets?
Many in traditional financial markets are incredibly skeptical of cryptocurrencies. There’s obviously a lot of work to be done in educating, and in building technologies and on/off-ramps that will allow businesses (old and new) to integrate with each other.
In stark contrast to highly regulated traditional financial markets, regulatory frameworks and supervision for digital asset markets are yet to evolve. Building the bridge between the old and the new market places also means complying with regulatory and legal requirements in a multitude of jurisdictions where due to the fast-paced development of the market, supervisors have not yet caught up with the status quo.
Also, any regulatory updates in major jurisdictions can be essential for the evolving blockchain and digital assets markets.