by Coinstrooper Crypto Articles
Quick Take
  • “Ideally, the one thing that makes sense to put on a blockchain is gold,” Schiff said in the video.
  • “You can use tokenized gold as a medium of exchange, as a unit of account, and as a store of value.”
  • However, CZ quickly weighed in on X (formerly Twitter), suggesting that tokenized gold only simulates blockchain integration.
  • “Tokenizing gold is NOT ‘on-chain’ gold,” he wrote.

What Happened

His remarks came in response to gold advocate and longtime Bitcoin critic Peter Schiff, who recently announced plans to launch a blockchain-based tokenized gold platform.

Trading volume for the asset class jumped to $640 million within 24 hours as investors sought refuge amid the ongoing U.S. government shutdown and global economic uncertainty.

Market Context

Gold’s rally in traditional markets has further fueled the conversation; the metal’s recent renewed market activity has drawn renewed attention to its tokenized versions in the crypto space.

The exchange between the two figures comes as tokenized gold markets hit new highs. On October 7, the combined market capitalization of gold-backed digital assets crossed the $3 billion mark, according to CoinGecko. Now, it is currently at over $3.75 billion.

Tokens such as Tether Gold (XAUT), PAX Gold (PAXG), and Kinesis Gold (KAU) led the market, each closely tracking spot gold prices, which briefly surged past $4,000 per ounce, an all-time high.

Tokenized commodities, led by gold, now account for more than $3.5 billion of that total, a 36% increase in the last month. Tether Gold and PAX Gold remain dominant, with market capitalizations of roughly $2.1 billion and $1.3 billion, respectively.

Why It Matters

In a recent interview clip, Schiff described a system where users could buy gold through an app, store it in vaults, and transfer ownership digitally or redeem it for physical gold. “Ideally, the one thing that makes sense to put on a blockchain is gold,” Schiff said in the video.

However, CZ quickly weighed in on X (formerly Twitter), suggesting that tokenized gold only simulates blockchain integration. “Tokenizing gold is NOT ‘on-chain’ gold,” he wrote.

“It’s tokenizing that you trust some third party will give you gold at some later date — maybe decades later, during a war, after management changes, etc. It’s a ‘trust me bro’ token.”

Details

A heated debate has emerged in the crypto community after Binance founder Changpeng “CZ” Zhao claimed that tokenized gold, despite its rising popularity, isn’t truly “on-chain.”

The Gold Debate Goes On-Chain: CZ and Peter Schiff Clash Over Blockchain’s “Real Value”

“You can use tokenized gold as a medium of exchange, as a unit of account, and as a store of value.”

He added that the upcoming platform, built under his company Shift Gold, will allow instant transfers and redemption, promoting what he described as a “stable” digital asset tied to physical value.

He added that such trust-based mechanisms explain why “no gold coins have really taken off” in the digital asset space.

Data from rwa.xyz shows continued growth in real-world asset (RWA) tokenization, with total on-chain RWA value surpassing $34 billion.

Despite the rising interest, CZ’s comment highlights a deeper question about whether these assets can truly be considered “on-chain.”

Are Tokenized Gold Really Not Fully Decentralized?

While tokenized gold allows holders to own digital representations of physical gold, typically pegged to weights like a troy ounce or a gram, the underlying asset remains stored off-chain in centralized vaults.

Issuers such as Paxos and Tether use smart contracts to mint tokens corresponding to gold reserves, offering audits and redemption options. But as CZ pointed out, the system still depends on third-party custodians to verify and safeguard those reserves.

In essence, while ownership of the tokens is recorded on the blockchain, the gold itself remains off-chain.

Each transaction relies on trust that the issuer indeed holds and manages the corresponding physical gold, a structure some critics argue undermines the core principles of decentralization.

For tokenized gold to be fully on-chain, both the representation and the settlement of ownership would need to occur without intermediary custodians, a technical and logistical challenge given that gold, as a physical commodity, cannot exist natively on a blockchain.

Currently, even the most transparent issuers still operate within traditional financial frameworks involving regulated vaults and audit institutions.

Over 150,000 Holders Now Own Tokenized Gold as Sector Activity Hits Record Levels