Or to give this post an alternative title 'Gold with a risk-twist' worth buying...?
Pax Gold is a digital token which is backed 1:1 by actual physical gold stored in secure Brinks vaults - and the PAXG token represents holders' ownership of physical Gold.
So PAXG is really just a further digital layer added onto how 'online Gold ownership' already works where people use broker services to buy gold and never actually see that gold themselves, rather they open up an account with a Gold holding and investing company, that company buys and stores the Gold on their behalf and all the investor ever sees is numbers on a screen representing their Gold.
So effectively, if you were to buy Gold via a third party all you would ever see of your gold is their centralised software's representation of the gold you have bought - and you are entirely trusting them to redeem that gold for dollars when you want to cash out, in same way you trust a bank to give your your cash when you demand it.
If you read the PAXG Whitepaper you find that the way the company behind the PAXG token does things is through these same online third-party Gold brokers - for example it maintains a Brinks account and uses this to purchase and store Gold.
So ALL of the disadvantages associated with buying Gold without holding it yourself as a physical asset in your safe apply to anyone who purchases PAXG.
All PAXG is a contract on the ETHEREUM network that represents that physical gold, bought by the PAX GOLD company from Brinks (or another company) and stored on behalf of PAX GOLD (which in turn acts on your behalf) by Brinks.
If you buy PAXG, yes you can type in your ETH wallet to see what gold is yours - the addresses are linked to an actual share of specific gold, but besides the ETH contract bit being decentralised there is NOTHING decentralised about buying PAXG, because at the end of the day you are entirely dependent on the Gold Broker who is holding your assets.
(NB if you want decentralised gold ownership you would need to buy and store that physical gold yourself at home or in a secret location away from home - like buried on yer Desert Island Yar Hargh.)
There are, however, some advantages to Pax Gold...
Three advantages of Pax Gold....
The first is sheer convenience - at least if you are already into Crypto.
PaxG is as easy to buy as any other Crypto Currency on the ETH network, and the company only charges a 0.02% fee to cover purchasing and sales which is reasonable, so you can avoid the hassle of setting up an account with a regular Gold purchasing company.
Which brings us onto our second advantage - anonymity - PAXG is (I think) the only way you can buy gold online without giving away your identity which online brokers would require.
You can of course buy physical gold anonymously easily enough in cash, but I'm talking here about the distant (virtual) version!.
A final advantage is that you can use your PAXG as collateral on NEXO and take out a loan - again you've got the problem here of this being CEFI and adding on ANOTHER layer of representation but it's an option.
I'm not aware of any decentralised options where you can stake PAXG at time of writing, but that would be nice!
Final Thoughts - PAXG - worth buying?
Err, for me the pros simply don't outweigh the cons compared to just holding physical gold, at least not with the relatively small amounts I'd be looking to buy (weight isn't going to be a problem for me!)
As I see it the ETH address add-on to the centralised ownership is just a bit of a gimmick - and the CEFI option for borrowing is too much of a risk - I'd rather just stick to stacking the regular physical gold coins, and they are kind of cute too, right, which PAXG just isn't!