Blockchain technologies will make it possible to trace the origin
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Blockchain technologies will make it possible to trace the origin and movement of gold around the world

Two major associations bringing together gold mining, processing and trading companies intend to create a blockchain-based database that will make it possible to track the origin and movement of gold bullion around the world. It is expected that this will prevent the trade in “counterfeit” metal and help buyers of bars trace their origin.

    Image source: PublicDomainPictures/pixabay.com

Image source: PublicDomainPictures/pixabay.com

Accordingly Reuters, the program is designed to keep gold out of the mainstream market in connection with violence and crime. Every year, billions of dollars worth of gold are mined in violation of the law, large transactions are made by all sorts of “warlords” and drug dealers. As Reuters reported back in 2019, many illegally acquired bars are coming onto the market forged with the logos of major refiners.

According to the London Bullion Market Association (LBMA) and the World Gold Council (WGC), the largest market participants intend to transfer their activity data to a common database in order to carry out a pilot project, the scope of which is expected to become global over time, and this is likely to help investors and other participants in the gold market determine how “responsibly” a particular bar has been mined.

The blockchain-based databases will be operated by aXedras and Peer Ledger, which will register and track the bars, their origin and full transaction history. For the time being, the pilot project only includes 1 kg bars instead of the 400 ounce wholesale bars traded by large market participants such as banks.

The LBMA and WGC associations intend to speed up the process of implementing systems as much as possible. According to the organizers, “traceable” gold will gain an advantage in the market over time over untraceable gold.

In addition, according to some experts, such systems can theoretically be used as additional tools of political pressure on objectionable regimes, for example, to declare a boycott of bars that are missing from the databases, and turn real gold into an analogue of securities.

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Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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