The London Bullion Market Association (LBMA) and the World Gold Council (WGC) have launched a blockchain-based solution to track the integrity of physical gold bars.
“Digital gold” taken literally
In a press announcement released yesterday, the LBMA states that it seeks to “develop and implement an international system of gold bar integrity, chain of custody and provenance”. For this purpose, the LBMA and the WGC join forces with major industry players in the gold supply chain, such as Centerra Gold Inc., CME Group, Degussa, Perth Mint, and the Royal Canadian Mint.
For an initial pilot project, they will be working together with two digital ledger companies, aXedras and Peer Ledger, to create an “immutable record of a gold bar’s place of origin and chain of custody”. The press release states:
Over time, the plan is to encourage all major participants in the gold industry to adopt this technology, and add to the global ecosystem, so that all gold bars are registered and tracked across the entire supply journey from mine to vault, and ultimately to end consumers such as jewellery manufacturers. This will effectively digitise the global supply chain of gold bars.
Why blockchain-based supply chain management for gold
Ruth Crowell, Chief Executive Officer of the LBMA, commented that the international trade of physical gold depends on confidence. This confidence is however often undermined by intransparent supply chains, which enable illegal mining operations, human rights abuses, money laundering, fake bullion bars, and other issues, according to a 2012 OECD report.
David Tait, CEO of the World Gold Council, states that his organization is “committed to addressing barriers to investment such as trust and provenance as this is key to unlocking the increased demand for gold”. He welcomes the blockchain-backed campaign to introduce more transparent standards to the gold industry, adding:
This transformative project is the first step towards a more aligned gold industry, where we work together to ensure a more accessible and transparent market. Consumers and investors want to know their gold has been responsibly and sustainably produced and tracing the origin of gold bars will help enforce the highest standards across the entire supply chain.
