Perth Mint to create cryptocurrency backed by gold

The cryptocurrency movement is capturing everyone’s imagination – including governments. Australia’s state-owned Perth Mint, operated by the Gold Corporation, intends to create its own cryptocurrency backed by gold.

Based in close proximity to Perth airport, the Perth Mint serves as the focal point of Australia’s precious metals refining. The refinery works on the vast majority of gold produced in Australia, as well as gold from surrounding countries.

In its own right, the Perth Mint stands up as one of Western Australia’s largest exporters distributing around $18 billion in pure gold, silver and platinum bars and coins to investors in more than 100 countries.

However, with the recent rush into Bitcoin and cryptocurrencies becoming mainstream, the Perth Mint is adapting to the challenge of modern financial markets. In a bid to keep up the digital times and to make its services available to a wider number of people and companies, Perth Mint has its sights set on developing a cryptocurrency that will be linked to a physical commodity.

Over the past two years, Perth Mint has taken affirmative steps into the digital realm of online trading, by launching its very own trading platform allowing consumers to purchase gold and other precious metals at the touch of a button.

Intending to take things a step further, the Perth Mint wants to incorporate blockchain and Distributed Ledger Technology (DLT) into its toolkit.

According to Perth Mint, the introduction of a crypto-gold product would improve accessibility to gold for all consumers as well as making gold investments more secure and transparent. The inherent value-add advantages offered by blockchain technology includes real-time market visibility, impenetrable security and flawless transparency across whichever network it operates on.

Blockchain technology has been applied mostly in the financial technology (fintech) space, although many other industries have benefitted greatly since its inception around a decade ago. Existing examples of effective blockchain and DLT applications have included tracking transactions, agricultural industries, logistics projects, land registration, online marketplaces, creating ‘digital assets’, and even applied in the music recording industry.

Perth Mint CEO Richard Hayes says that a launch date for Perth Mint’s blockchain-powered products hadn’t been set although “the next 12 to 18 months would result in significant movement in that direction.”

Over the past year, Australia retained its status as the world’s second largest gold producer after China, and is expected to remain so for the foreseeable future given the resurgence in Australian gold mining and the resources sector as a whole. The next evolution of cryptocurrencies being backed by precious metals, could be a step in the right direction, particularly in this case for maintaining Australia’s gold market dominance in Asia.

In terms of physical gold refining and delivery, the Perth Mint is accredited by several internationally recognised gold-market entities such as the London Bullion Market Association (LBMA), the Tokyo Commodity Exchange (TOCOM), the New York Commodity Exchange (COMEX) and the Dubai Multi Commodity Centre (DMCC).

In the cryptocurrency space it remains unknown as to how the entire industry could be regulated with several options currently being looked at by policymakers in the G20.