US tech startup TradeWind Markets has launched a digital gold trading and settlement system that is expected to streamline and speed up the trading process and cut transaction costs. The platform, which utilizes blockchain technology, has the Royal Canadian Mint as its first user. The government corporation will offer storage solutions, making sure that the digital gold corresponds to physical bars.
Matt Trudeau, co-founder and president of TradeWind, told Bloomberg:
“The gold market today is a very manual market. A lot of the dealing is done over the telephone, via email, maybe even faxes or chat rooms. We feel like this will reduce the frictional and transactional costs in the market and lead to greater liquidity and price discovery.”
The New York-based startup, which is backed by Sprott and Goldcorp, will use a distributed ledger technology application called VaultChain. It will provide secure identification of members, register gold, and handle transactions. TradeWind’s platform will initially target North American gold dealers, but Trudeau expects it to grow into a global solution.
Gold-oriented investment manager Sprott currently owns about a fifth of TradeWind and intends to use its blockchain platform as a dealer. However, the company stated it was too soon to make a decision on whether to move its physical gold trust onto the system. Sprott CEO Peter Grosskopf said the digitization of gold trading could be the most important development the gold market has seen in recent decades.
“Gold has always been criticized as being an inefficient product, a lazy product, a product that’s hard to transact with. It’s almost as though the blockchain were invented for gold. The marriage of the two, I think it’s going to be incredibly powerful,” he said.
Grosskopf anticipates that gold will be used as a form of digital money thanks to the blockchain.
TradeWind will let its customers own gold in a wallet on its blockchain platform and will not charge management fees. The startup plans to generate revenue from the transaction fees paid by dealers.
In January, Sakhila Mirza of the London Bullion Market Association (LBMA), which manages the largest OTC market for gold and silver trading, said that blockchain might be the ideal solution for tracking gold supply.