Royal Mint Group (RMG) UK’s coin metal production, and CME Group, leading U.S.-based derivatives exchange collaborated to build a blockchain-based virtual platform for trading gold in a effort to reduce the expenses involved in trading the precious ore. The Platform is scheduled to begin in 2017. Royal Mint, the Treasury-owned body that is permitted to strike British coins issue Royal Mint Gold enterprised via a platform generated and operated by the CME Group. Royal Mint will put gold bars into its on-site secure depository, which will then be virtualize to generate RMGs whose ownership will be listed on the blockchain. Merchants will then be able to deal in and out of Royal Mint.
Blockchain or distributed ledger technology keeps track of and authenticates a continuously growing list of transaction data, which is secured by a global network of computers and is virtually impossible to be tampered with or revised. Blockchain first emerged as the technology underpinning digital currencies such as bitcoin, but is now being adapted for use in more traditional financial tasks. One RMG will represent one gram of gold, which is currently worth around $42. David Janczewski, director of new business for the Royal Mint said “While things have improved in terms of gold trading over the centuries, it’s our view that it still remains difficult and relatively expensive as a commodity to invest in. Gold is known in the industry as a negative-return investment. What we’re trying to do with the announcement of Royal Mint Gold is to really address this issue and offer a better way to invest in solid digital gold”.
The platform will operate 24 hours daily. Unlike the traditional model for investing in gold, with management fees and storage charges, Royal Mint will offer holding of the underlying gold with the option for conversion to physical gold by the Royal Mint at zero depository amount. The Royal Mint plans to issue up to $1 billion worth of RMG initially, with more added later, subject to demand. It will be offered through both retail and institutional investment providers. Sandra Ro, executive director of digitization at CME Group said “We spent the greater part of this year with the Royal Mint working through the fact they wanted to launch a digital gold product and looking at all the available technologies that were out there. This is not about just applying blockchain just because it is blockchain, This is about looking for what the best delivery mechanism is that could also help us to scale at a global level over time”.