Royal Mint Experimenting with Blockchain-based Gold Trades
The Royal Mint partnered with markets operator CME Group to build a gold market with blockchain technology as a means of broadening London’s hip-factor when buying and selling gold bullion.
The Roya Mint, owned by taxpayers, plans to accept trades from the middle of next year on the Royal Mint Gold platform, intended to log each transaction using blockchain.
Underpinned by $1bn in gold bars, the gold tradable on a blockchain will be held in Mint vaults located near Cardiff.
Blockchain technology, which underpins Bitcoin technology, represents a distributed database in which information can be accessed, secured and sent and received in a distributed manner.
Royal Mint, along with CME, spent a year trying to develop a blockchain-based platform to work with their gold market. Their aim was to change the way gold is bought and sold, a system unchanged for hundreds of years.
“We were looking for a solution that was efficient in handling trading. We didn’t set out with blockchain in mind but we wanted to address the problem that it costs money to vault gold. This is a digital solution to physical gold trading,” said David Janczewski, director of new business at the Royal Mint.
How the blockchain will be deployed is unknown. Buyers will be able to store their gold for free with the Mint. Trades on the blockchain will be made in between dealers, but won’t feature an OTC exchange in the middle as is usual.
London transacts about $5 trillion in gold deals annually. More takes place in derivatives markets. The Mint boasts 20,000 customers on its online marketplace for gold coins which is just two years old, according to The Guardian.
The new venture is announced as the Royal Mint is dealing with a bit of a pain in the butt – literally. A Royal Mint employee recently was found guilty of sticking gold bars up his rear-end. KY jelly and rubber gloves were found in his locker.
The London Bullion Market Association has been looking for ways to modernize the market. Other Mints globally have experimented with similar projects. Inspired by Bitcoin, the Royal Canadian Mint developed MintPay in recent years.