Binance’s CZ Says Tokenizing Gold Is NOT On-Chain Gold
- Changpeng Zhao warns that tokenized gold relies on trust, unlike decentralized Bitcoin.
- Tokenized gold is backed by custodians, not direct ownership of real physical gold.
- Peter Schiff plans a tokenized gold product aiming to rival Bitcoin for digital payments.
Binance founder Changpeng Zhao has cautioned investors against confusing tokenized gold with real on-chain assets. In his post on X, Zhao explained that tokenized gold only represents ownership of gold stored elsewhere. He said these tokens are not truly digital gold because they rely on a company’s promise rather than decentralized verification like Bitcoin.
The tokenized gold is still linked to a third-party trust, Zhao said. Holders rely on a custodian to redeem the gold supporting the tokens. Investors do not have outright ownership of the physical metal and instead own a digital certificate controlled by the issuing firm.
Tokenized Gold Undermines Crypto’s Core Values
He explained that tokenized gold requires trust in a third party to deliver the asset in the future. Even under uncertain circumstances, such as management changes or global conflicts. Zhao described such tokens as dependent on external guarantees instead of blockchain validation, undermining the core principle of decentralization.
CZ countered that this arrangement was against one of cryptocurrency’s main value propositions, getting rid of intermediaries. Relying on vaults or entities also means that tokenized gold sacrifices the decentralized aspect that makes up digital assets like Bitcoin.
His comments come amid growing comparisons between gold and Bitcoin as stores of value. Gold has traditionally served as a hedge against inflation and currency devaluation. However, Bitcoin’s verifiable and limited supply appeals to investors seeking transparency and independence from central entities.
Peter Schiff Plans Tokenized Gold to Rival Bitcoin
Gold advocate and long-time Bitcoin critic Peter Schiff announced plans to release a tokenized gold product. During an interview with Crypto Tengen, Schiff said the product would let people use gold for payments and transactions through blockchain technology. He claimed it could function as a superior alternative to Bitcoin for everyday financial use.
Schiff said that gold would maintain its purchasing power and that tokenizing it on blockchain could make it more functional. He argued that gold could achieve what Bitcoin promises but fails to deliver in terms of price stability and long-term reliability as money.
Schiff explained that his new platform, SchiffGold, would allow users to buy tokenized gold stored in vaults. He said the system would let traders redeem, transfer, or hold ownership of physical gold through digital means. According to Schiff, transactions would be faster and cheaper than Bitcoin transfers while maintaining value stability.
Related: Gold Suffers Biggest Drop Since 2013 as Bitcoin Briefly Tops $114K
Despite Schiff’s confidence, gold prices have recently suffered one of their sharpest declines in years. The metal dropped from $4,381 to a weekly low of $4,115, cutting its market capitalization by roughly 2 trillion dollars. Prices later recovered slightly, stabilizing near $4,150 after two consecutive days of losses. The sell-off reflected investor shifts toward other risk assets. Meanwhile, Bitcoin showed a mild recovery after gold’s downturn. The coin rose 1.58% in the past 24 hours. It briefly climbed above $110,000 before settling near $109,254 at press time.
Earlier this week, Zhao predicted that Bitcoin’s market capitalization would eventually surpass gold’s. He acknowledged that the transition may take time because of the wide gap between the two. Still, Zhao expressed confidence that Bitcoin’s decentralized nature and scarcity would eventually make it more valuable than gold.
According to Companies by Market Cap, gold remains the largest asset worldwide with a valuation of $28.70 trillion. Bitcoin currently ranks eighth with a market cap of $2.178 trillion, and it would need to reach around $1.5 million per coin to surpass gold’s value.
