First things first:
Yes, gold-backed tokens are not a replacement for Bitcoin.
You must trust the issuer (we’ll get to that later) not to run fractional-reserve games.
You must trust that your gold-backed token – essentially an IOU – won’t suddenly lose redeemability or get frozen or invalidated.
“You don’t own what you can’t control.”
Everyone knows this by now – or should.
With these risk disclaimers out of the way, let’s ask the actual question:
Why would anyone consider adding gold-backed tokens to their portfolio?
Does it make sense for your situation?
If your plan is to relentlessly and unwaveringly stack Sats, we already provide plenty of tools and guidance for that – feel free to skip this article entirely.
But some people don’t want to be “100% Bitcoin all the time” and are curious about potential alternative allocations.
This article is for them.
Why would I want to hold XAUt (Tether Gold) instead of physical gold in a vault?
In our view (not financial advice, do your own risk assessment!) a gold-backed token is arguably the most practical way to hold “paper gold.” You still rely on the issuer (and we’ll get to that), but you gain the ability to move, swap, and transact with your gold exposure at the semi-permissionless speed of a public blockchain.
What it is not: a replacement for your own physical gold stash under direct personal control. Physical metal is more akin to disaster insurance than an investment. When borders close (*coughcough*), redemption halts, or the financial plumbing seizes up… the only gold that remains unquestionably “yours” is the gold you physically hold.
The downside of XAUt is obvious: it’s on-chain. Everything is fully transparent for the entire world to see, trace, and – if you haven’t taken care of your cyber-hygiene – potentially link to you personally. Poor operational security can turn even a modest on-chain balance into a roadmap for anyone looking for an easy target.
If you do not manage your traceability properly, you can very quickly become visible to the wrong kind of people – and those people may see you as a viable target for coercion or extortion.
Physical attacks on crypto holders have surged over the past few years (as expected when more of the world’s wealth starts living on-chain), and attackers are becoming increasingly sophisticated in both targeting and execution.
This is not a distant possibility any longer, but the threat environment we all operate in today, and one we must actively adapt to.
In that sense, paying annual storage fees for a discreet physical allocation in Switzerland or Singapore remains the more private choice.
However – if your goal is simply to allocate part of your portfolio to gold without expensive storage fees, without opening accounts at slow and cumbersome TradFi bullion platforms, and without logistical headaches, then XAUt provides instant, low-friction gold exposure. You can buy and sell it within minutes, at negligible cost, and settle it like any other cryptoasset.
And if you prefer to stay more private while doing so, you can always route your swaps through Monero, Bitcoin Lightning, or shielded Zcash via the BitcoinVN Instant Swap Exchange.
Why would I pick a Gold-backed stablecoin over a USD/fiat-backed stablecoin?
Now, on this question – whole libraries full of books have been written about the debate between gold-backed monetary units and untethered fiat currencies issued by a central authority with effectively no constraints, limits, or boundaries.
We won’t go into the deep end of that discussion in this particular piece (you can find plenty of other articles on this site – and many elsewhere – that explore different angles of this topic in far more detail).
For our purposes here, it’s enough to state the simple and obvious baseline:
Fiat- and especially USD-backed stablecoins – still – have their strong purpose in this day and age, even though over the long run their days may be numbered given the technological trends we are facing (and the structural headwinds government-issued currency encounters as the issuer’s balance sheet and earning capacity become ever more lopsided due to demographic and technological forces).
If you simply want to move funds quickly, pay for goods or services, settle invoices, or handle international transfers, the stability provided by USD-backed stablecoins may outweigh the built-in, slow but constant value erosion inherent to fiat currencies such as the USD.
However, if you want to re-assess your portfolio allocation and move a part of your savings into an alternative asset for a mid- or even longer-term horizon, a gold-backed token is comparatively likely a much more prudent choice.
After all, if you genuinely want to evaluate your long-term investment and portfolio returns, tracking them in ounces of gold rather than in ever-inflating fiat currencies is the only way to get an honest view of whether you’re building or destroying wealth and purchasing power.
And if you look at the long-term performance of most “active money managers” versus gold… it ain’t lookin’ pretty. Which is precisely why the financial industry – and its associated mouthpieces (media, commentators, and “thought leaders”) – have every incentive in the world to keep you measuring your returns with a broken yardstick (fiat currency).
“Number-go-up” simply feels better than number-go-sideways or – worse – number-go-down.
Geopolitically, the events of the past two decades – and the past five years in particular – have accelerated a shift away from the USD and U.S. government debt as the world’s default “reserve asset.”
For decades, every productive country or entity effectively shoveled its excess earnings into U.S. bonds to underwrite the West’s increasingly extravagant spending habits.
Today, that dynamic is breaking down. Countries are seeking greater independence by:
- building out their own non-USD payment and settlement networks, and
- storing their accumulated savings in neutral reserve assets that no Western government can interfere with.
And for point b), as much as we may personally appreciate Bitcoin, for sovereign nations with sufficient power projection to secure it, vaults stuffed with gold remain “the money of kings.”
As such: For any non-Bitcoin funds you aim to keep for months or years rather than hours or days, a gold-backed token might be the more prudent choice compared to holding USD, helping you escape the constant value drain imposed on your savings by the money printer.
XAUT vs. XAUT0 (LayerZero) – differences and considerations
What is XAUt (Tether Gold)?
Tether Gold (XAUt) is issued solely on the Ethereum blockchain via an ERC-20 smart contract deployed by TG Commodities Limited, a Tether-affiliated entity. As of writing, approximately 380,000 ounces of gold have been tokenized through this contract.
Any other forms of XAUt on non-Ethereum networks (such as XAUt0) are not issued directly by Tether but are instead representations bridged from this canonical version via third-party protocols.
So what is XAUt0?
XAUt0 is the cross-chain version of Tether Gold, created using LayerZero’s technology so that a wrapped representation of the original XAUt can exist on multiple blockchains instead of being limited to Ethereum.
The original XAUt lives exclusively on Ethereum and is issued by TG Commodities (a Tether-associated affiliate). But many users want to move the same gold-backed asset on faster and cheaper networks.
To support this, the USDT0 / Everdawn Labs infrastructure locks XAUt on Ethereum and then issues XAUt0 on other chains based on LayerZero’s mint/burn messaging.
In simple terms:
- XAUt = the original Ethereum gold token issued directly by Tether
- XAUt0 = a cross-chain version created when XAUt is locked and represented on other networks
- Supply stays in sync because minting/burning is triggered by LayerZero messages
Even though XAUt0 is operated through an additional layer (Everdawn Labs + LayerZero), it is still – ultimately – backed by the same underlying gold reserves as XAUt on Ethereum.
Advantages of XAUt0 vs. XAUt (Ethereum)
- Often significantly lower transaction fees and faster settlement compared to Ethereum L1
- Wider accessibility of one of the most trusted gold-pegged digital assets for investors, users, wallets, and DeFi tools operating outside the Ethereum ecosystem
Risks & structural differences
However, users should be aware that by using XAUt0, an additional counterparty layer (LayerZero and its associated infrastructure) is introduced. This needs to be accounted for in any risk assessment.
For mid- or long-term storage, it is generally more prudent to hold XAUt on Ethereum, where your only counterparty is the issuer itself, Tether.
If, however, you require a gold-pegged token for short-term usage, active trading, or market operations on non-Ethereum chains, then XAUt0 can be a practical and efficient alternative.
Which chains does BitcoinVN currently support for XAUt / XAUt0?
Besides the “native” version of XAUt on Ethereum, you can swap in and out of XAUt0 on the following chains:
As usual, crypto- and cross-chain swaps are executed instantly for up to 50k$ per swap – no sign-up required.
And as mentioned above, you can also route XAUt/XAUt0 via Monero, Lightning (Bitcoin), or shielded Zcash to minimize your on-chain footprint and maintain a higher degree of operational security both online and in real-life scenarios.
We also provide a compact, well-documented API that allows you to integrate our swap service quickly. Our team is available to discuss how we can support your product or service through our infrastructure.
The general ideation & benefits of a Gold-backed token such as XAUt
Tether Gold (XAUt) was launched in January 2020 by TG Commodities Limited, an affiliate of Tether, the issuer of USDT. Each XAUt represents one troy ounce of gold in a London Good Delivery bar, stored in secure Swiss vaults. Unlike many “unallocated” gold products, XAUt is marketed as being backed by allocated bars with identifiable serial numbers, and larger holders can – at least in theory – redeem their tokens for physical gold in Switzerland if they meet the minimum thresholds and conditions.
The idea behind XAUt was simple: combine gold’s familiar store-of-value role with the 24/7 liquidity of crypto. No ongoing storage fees (only mint/redeem fees), the usual seamless crypto-asset mobility across exchanges and wallets, and fractional ownership down to tiny units. Increasingly, XAUt has carved out its own niche as a kind of “digital gold bar” alternative alongside USD-backed stablecoins, used by traders, long-term allocators, and some DeFi platforms.
But the usual caveats still apply: you must trust the issuer, the custodian, and the legal machinery that links the token in your wallet to an actual bar sitting in a Swiss vault.
Can I trust a gold-backed stablecoin such as XAUt?
In general, we would urge extreme caution when allocating any non-negligible share of your portfolio to “backed” tokens – whether they are fiat stablecoins or assets claiming to track a government-issued currency or commodity. History has shown, repeatedly, that many of these schemes maintain a confident, public-facing peg while quietly siphoning funds out of the back door.
Everything looks “stable”… right up until the moment it isn’t.
And when these systems fail, they tend to fail all at once.
With that said, there are currently two gold-backed tokens that have established a clear lead in the market and are issued by long-standing, well-capitalized players with solid reputations in the ecosystem.
These are Paxos Gold (PAXG) – issued by Paxos, a US-regulated trust company with over ten years of operating history in the crypto industry (originally founded as itBit) – and Tether Gold (XAUt), issued by Tether, the world’s largest stablecoin issuer.
Tether has reported record profits in recent quarters – billions of dollars per quarter – and is, on a per-employee basis, quite possibly the most profitable company on the planet. From a financial-strength perspective, XAUt has exceptionally deep backing, and the likelihood of a “rugpull” scenario is, in our view, minimal – comparable to the most reputable TradFi bullion brokers and storage providers.
Tether Gold itself remains a relatively small (though rapidly growing) part of the broader Tether empire. It is – in our view – highly unlikely that Tether would jeopardize the credibility of a business generating billions in quarterly profits by “playing funny games” with the physical gold their users have entrusted to them.
You may take this as a signal, depending on your own judgement:
BitcoinVN is allocating a small portion of our own balance sheet into the gold-backed tokens XAUt (Tether Gold) and PAXG (Paxos Gold).
We trust these issuers enough to place a part of our own capital with them.
In other words: we feel confident enough in these instruments to hold them ourselves rather than sourcing external liquidity to cover swap demand on the platform.
Tether has stated that it now operates its own vault for its gold reserves, removing the counterparty risk that would come with depending on an external vault provider.
Want to self-custody your Gold-backed tokens?
The usual question comes up sooner or later: if you do want to keep part of your portfolio in a gold-backed token like XAUt – how do you store it safely?
If you are a serious person, the answer is obvious:
NOT ON AN INTERNET-CONNECTED DEVICE.
And certainly not with yet another trusted third party (exchanges, service providers…).
Not your keys, not your coins applies here as well.
Even though the issuer can “freeze” your tokens if they suspect illicit origin or misuse, you can still reduce your overall counterparty risk significantly by not handing your assets to yet another third party to look after.
So, in short:
If you have any reasonable amount of wealth stored in digital assets, get a hardware wallet.
XAUt can be stored safely on most recent multi-coin hardware wallets – including the current models from Trezor and Ledger.
And if you are based in Vietnam, you already know the trusted source for these devices:
BitcoinVN Shop has been serving the Vietnamese market since 2017 as an authorized supplier of Ledger and Trezor hardware wallets.
You will benefit from fast delivery (or if based in Saigon – even same-day delivery) and skip the usual customs hassles that might make obtaining these devices from abroad quite convoluted.
Important to note:
Bitcoin-only devices such as the Coldcard by Coinkite or the Blockstream Jade do not support storing alternative crypto assets like XAUt (Tether Gold). They are designed exclusively for securing your Bitcoin – the highly prudent “less is more” principle.
If you want to do it even more right:
To reduce the risks that come from leaked PII linking your public crypto addresses to your real identity (and possibly your home address…), you can use private swap options such as Bitcoin Lightning, Monero, or shielded Zcash via the BitcoinVN Instant Swap service, then move the XAUt to a fresh wallet address you control.
Making it harder for criminals to know what you own is essential for surviving in an increasingly chaotic environment where taking your personal security seriously is no longer optional.
A single slip-up might make you – or your family – a target. And as time goes on, the probability of being targeted only increases, not decreases.
Stay safe, stay vigilant!
