What is PAX Gold ($PAXG) | The Gold-Backed Stablecoin

KEYTAKEAWAYS

TABLE OF CONTENTS

• KEY TAKEAWAYS
• WHAT IS PAX GOLD (PAXG)?
• PAX GOLD OVERVIEW
• HOW DOES PAXG WORK?
• IS PAX GOLD REAL GOLD?
• DISCLAIMER
• WRITER’S INTRO

CONTENT

PAX Gold (PAXG) is a tokenized gold asset on Ethereum, backed 1:1 by real gold stored in secure vaults. It offers true gold ownership with blockchain transparency, liquidity, and low entry barriers.

WHAT IS PAX GOLD (PAXG)?

In 2025, gold prices experienced an unexpectedly strong rally, driving up the value of gold-related cryptocurrencies as well. As the world’s second-largest tokenized gold asset, PAX Gold (PAXG) delivered an impressive performance over the past year, fueled by gold reaching new all-time highs.

PAX Gold (PAXG) is a gold-backed stablecoin designed to democratize access to gold ownership. It allows everyday investors to trade gold as easily as they would any other cryptocurrency.

Gold has a history stretching back thousands of years and remains one of the world’s most popular investment assets today. While modern investment options like stocks and crypto have gained traction, gold continues to hold a significant place in diversified portfolios.

However, owning physical gold has traditionally been costly and logistically challenging for most individual investors. To address these barriers, Paxos launched PAX Gold—a product that bridges the gap between digital assets and physical gold ownership.

>>> More to read: What is Gold Tokenization? A Beginner’s Guide to Digital Gold

PAX GOLD OVERVIEW

PAX Gold (PAXG) is issued and managed by Paxos, a regulated financial technology company based in New York. Each PAXG token is backed by one fine troy ounce of London Good Delivery gold bars, securely stored in vaults operated by Paxos and its trusted partners.

The design of PAXG ensures that its market value closely mirrors the real-time price of the physical gold it represents, following a similar structure to fiat-backed stablecoins.

📌 Technical Foundation

• Blockchain: PAX Gold (PAXG) is built as an ERC-20 token on the Ethereum blockchain.

• Accessibility: This structure makes PAXG easy to trade with other crypto assets across exchanges and DeFi platforms.

• Security: Ownership and control of PAXG are managed through users’ private cryptographic keys, enhancing security and self-custody.
  

📌 Transparency and Regulation

To maintain full transparency and investor confidence:

• Paxos undergoes monthly third-party audits to verify that the total supply of PAXG exactly matches the physical gold reserves.

• PAXG operates under the regulatory oversight of the New York State Department of Financial Services (NYDFS), ensuring compliance with strict financial standards.
  

📌 Flexibility for Investors

PAXG holders benefit from versatile redemption options:

• Tokens can be redeemed for allocated physical gold bars.

• Smaller denominations of gold can be obtained through a global network of certified gold retailers.
  

🔍 Why PAX Gold (PAXG) Matters

By merging the timeless value of physical gold with the efficiency of blockchain technology, PAX Gold solves several modern investment challenges:

• Eliminates high storage and insurance costs typically associated with physical gold.

• Reduces security risks related to holding and transporting bullion.

• Enhances liquidity, allowing investors to buy, sell, or transfer gold ownership easily and globally.

In short, PAXG offers a seamless bridge between traditional gold investment and the digital asset economy — without the traditional barriers of physical gold ownership.

>>> More to read: Tether Gold (XAUt) | Gold Innovation On The Blockchain

HOW DOES PAXG WORK?

PAX Gold (PAXG) is an ERC-20 token on the Ethereum blockchain, backed 1:1 by physical gold. It offers a modern, flexible way to access gold markets without dealing with the hassle of physical storage and transport.

✅ Key Features & How It Works:

• Each PAXG token represents one fine troy ounce of LBMA-certified London Good Delivery gold

• Gold is securely stored in high-security vaults managed by Paxos and its partners

• No custody or storage fees are charged to holders

• Tokens can be transferred across wallets, centralized and decentralized exchanges, and DeFi platforms

• Users can trade, stake, or redeem PAXG for gold bars, fiat, or other cryptocurrencies

• A 0.02% fee applies to token creation and redemption; gas fees apply on the Ethereum network

• Divisible up to 18 decimal places — allowing fractional ownership of physical gold

✅ Transparency & Security:

• Each PAXG token is linked to a unique serial number tied to a specific gold bar

• Holders can look up details of their gold (weight, value, serial number, vault location) using the official lookup tool

• Paxos undergoes monthly third-party audits to verify that PAXG supply matches physical gold reserves

• All transactions are monitored via third-party analytics to prevent fraud and money laundering

• Smart contracts are regularly audited to fix bugs and strengthen protocol security

>>> More to read: Bitcoin vs. Gold: Which is the Better Investment?

IS PAX GOLD REAL GOLD?

🪙 How Is It Different from a Gold ETF?

As previously mentioned, PAX Gold (PAXG) is tokenized gold operating on the Ethereum blockchain. Tokenization is the process of converting tangible or intangible assets into digital tokens that can be transferred and stored on-chain.

Each PAXG token represents actual physical gold held in custody by Paxos Trust Company. These gold bars are certified by the London Bullion Market Association (LBMA) and securely stored in high-grade vaults. Every token is directly backed by one fine troy ounce of real gold.

🔍Why Gold?

Gold has long been considered a reliable store of value. It maintains its purchasing power over time, making it a popular hedge against inflation.

When the U.S. dollar weakens, gold (priced in USD) typically becomes more expensive—and vice versa. This inverse relationship makes gold attractive to investors seeking to protect wealth from currency depreciation.

✅ Transparency Through Blockchain

• Each PAXG token is linked to a unique serial number that matches a specific gold bar in custody.

• Users can input their Ethereum wallet address into the official PAXG Lookup Tool to view details such as:
  • The serial number of the gold bar

  • Its current market value

  • Vault location and bar characteristics

Additionally, users may choose to redeem PAXG for:

• Allocated or unallocated gold bars at the current spot price

• Fiat currency

• Other cryptocurrencies

📌 PAXG vs. Gold ETFs: What’s the Difference?

While both options provide exposure to gold prices, there’s a critical distinction:

• Gold ETFs give you exposure to the price of gold via synthetic contracts or pooled shares—but you don’t actually own any physical gold.

• With PAX Gold, you own a direct, allocated share of real, physical gold stored in vaults. Each PAXG token corresponds to an actual gold bar held in custody, not just a paper-based financial derivative.

In essence, PAXG combines the trust of physical gold with the transparency and flexibility of blockchain technology—offering true ownership, not just price speculation.