Blockchain technology is about to come full circle. The technical ideas that allow bitcoin, designed as a form of digital gold, to operate will soon be used by the UK’s government-owned Royal Mint in a new gold-trading system.
The 1,000-year-old Royal Mint is working with CME Group—the world’s largest futures exchange operator—to put $1 billion worth of gold on a blockchain sometime next year. The idea is to allow customers to own and trade fractions of gold, stored in the Mint’s vaults, using a new digital token called Royal Mint Gold (RMG). Each RMG equates to a gram of gold.
The new scheme cuts out the management fees and storage costs that current spot-trading in gold incurs. The Mint, for instance, charges between 0.5% and 1% of the average value of a customer’s holdings for using its vault.
A blockchain reduces the administrative headaches of deciding who owns what fraction of a gold bar—which is one of the technology’s key promises.
For instance the bitcoin blockchain, the world’s largest and most robust, is a record of every bitcoin transaction ever performed. But it’s not maintained by any one entity, because that would be a lot of work for anyone; instead, it’s shared