January 25, 2023


Blockchain Set to Change the Way We Trade Gold

Exploring the existing infrastructure of gold trading 

Gold has been a part of trade for well over 3500 years, and has remained a means of exchange globally throughout the eras of technological advancement. 

Even today, gold is considered one of the most stable long term assets in trade, operating as a hedge when inflation rises and causes the value of currencies around the world to erode. Gold remains a valuable commodity that allows investors to diversify their portfolios against stock holdings and other investment vehicles.

The oldest form of gold trade is physical transactions, such as exchanging Gold Bullion for cash or resources. Modern innovations and the development of technology introduced options like Gold Futures and Gold Exchange Traded Funds (ETFs), wherein buyers can agree to buy gold on a specified date or invest in gold-related assets.

Overview of blockchain technology 

Blockchain has already proven to be a disruptor of archaic industries, modernizing and securing data in new and efficient ways. It is borderless, recording and encrypting global transactions securely in an immutable digital ledger. Blockchain is most often recognized as the technology underpinning cryptocurrencies, but there are near limitless possibilities as to how blockchain can be applied to different industries. 

The virtual ledger is distributed across a network of computers (nodes) and synchronized, maintaining a single cohesive dataset. Any new transaction is recorded with a cryptographic signature called a hash, which also retains a timestamp. Once a block of transactions is approved by the network through a consensus mechanism, it is appended to the "chain" of validated data blocks, and in turn, all previous data is also validated by the consensus protocol. This process makes blockchain incredibly difficult—almost impossible—to hack or change. 

How blockchain technology is being used in gold trading 

This year, post-financial crisis banking regulations had a huge impact on gold after it was shown to be difficult to trade during periods of extreme strain. The newly implemented regulations increased the cost of holding bullion for banks, which further decreased the already slim profits from gold trading and raised fears of a decreasing market. 

In addition to this, the rise of cryptocurrencies and digital assets in the twenty-first century has presented a challenge to tradition. While many investors try to diversify their portfolios, traders want to see assets move into the next era of technology, and thus far gold has seemingly lagged behind. 

Blockchain operating as a virtual ledger for ownership and purchasing of gold is the most practical application for improving security and transparency, while creating a fully traceable history of transactions. 

Every physical gold bar will be recorded on the blockchain, creating a digital counterpart.This in turn will lead to exchangeable, interoperable markets, and confidence in gold trading. 

Some companies have moved towards using blockchain to operate in tokenized gold, but Matador continues to exclusively work with fungible gold stored securely in a federal government storage facility. 

The World Gold Council emphasizes the need for integrity, transparency, trust, and traceability when it comes to gold, and Matador is making it happen. 

Benefits of blockchain technology in gold trading 

The transformation taking place with Matador is based on three fundamental elements: integrity, accessibility, and fungibility. These three components are the result of digitizing gold and modernizing the gold market's infrastructure. 

The revolution in the way in which gold is traded allows investors a far more convenient way to purchase, own, and trade physical gold. This approach is intended to increase the confidence in gold and, in turn, generate increased demand. The key is in accessibility to new buyers, allowing them the opportunity to join the market. By appealing to the cryptocurrency generation, gold will likely see a resurgence with new investors who want to see the latest technology applied to all their holdings.  

Blockchain’s confirmation protocols offer the security and reassurance in an investment that has already held up longer than any other currency in society.  It balances traditional ledger keeping with modern tech that reduces the risk of error.  

Potential obstacles of blockchain technology in gold trading

Blockchain - like all new technology - is not without its critics. While most uncertainty around blockchain comes from its novelty, there are often people quick to dismiss the value of the resource. 

The root of the issue for most blockchain-utilizing projects not succeeding lies in the fact that it is not just about implementing blockchain, but more so about obtaining global agreement from a variety of players and ensuring standardization as well as interoperability. It is almost humorous that this has been the main topic of conversation at Sibos conferences since the early days.  The required collaboration, as well as potential holdouts among some key players, complicate implementation.True to the consensus protocol that blockchain operates on, to make the transition all parties must be in agreement, which can involve complex negotiations. 

Beyond this, concern has also been expressed around the idea of digitizing a gold bar using a decentralized system, whilst simultaneously relying on trust in the banks (a centralized system) to hold the physical gold. Some people view this as a contradiction to the ethos of decentralization.


While Blockchain stands on the precipice of making waves in the gold industry, the first and most invaluable step is the application of blockchain for securing transactions.  

Matador, as a platform built by gold buyers for gold buyers, prioritizes you and your investment. All gold purchased from the Matador inventory is held securely at the Royal Canadian Mint in Ottawa, Ontario. The physical asset stays behind a high level of security and fortification until it is sold or shipped directly to the purchaser. 

Transactions are recorded securely on a blockchain ledger, ensuring all transactions are documented and trackable as a part of our backend process. This advancement offers our buyers more security and reassurance in their investment. 

There are exciting new developments in technology and in the gold market, but our goal is always to offer unprecedented access to fungible assets that have stood the test of time. Matador will continue to modernize the gold-buying experience and improve security for buyers across Canada.

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