Binance founder Changpeng Zhao (CZ) challenged economist Peter Schiff’s plan of unveiling a tokenized gold product.
According to CZ, tokenized gold is not equivalent to digital gold. The Binance founder insisted there is a difference between the two.
Changpeng Zhao Debunks Economist Peter Schiff’s Tokenized Gold Product
A recent interview featured gold advocate Peter Schiff unveiling plans to launch a tokenized gold product.
The economist and radio personality explained that this product would let people use gold directly as a medium of exchange.
He explained that “You can pay or be paid in gold,” adding that he also intends to introduce a debit card linked to users’ gold holdings.
The card, he noted, would automatically sell gold to cover any purchases or transactions. Schiff argued it functions better as money today than at any point in history.
However, Binance founder Changpeng Zhao pushed back on Schiff’s claims, saying tokenized gold doesn’t equate to real “on-chain” gold.
According to Zhao, such assets still rely on a third party to redeem the underlying metal, turning them, as he put it, into a mere “trust-me-bro” token.
He noted that understanding the concept of bridging real-world assets on-chain is not difficult for crypto users, but for other people, the learning curve is steep.
Zhao noted that tokenized gold might mirror the value of physical precious metal, yet it lacks true on-chain settlement.
That distinction, he explained, sets it apart from genuinely decentralized assets that live and move entirely on the blockchain.
Gold-backed Crypto Coins Have Little Demand
CZ also argued that gold-backed coins have never truly succeeded because they rely too heavily on trust.
He said the promise usually comes down to a third party assuring investors they can redeem their gold “at some later date.
This is despite the risk of management changes, decades later, or during unavoidable circumstances like war.
Besides, another long-standing challenge for gold-backed crypto tokens is their limited demand. Among a plethora of such crypto coins, only two have managed to cross the $1 billion market-cap mark, PAX Gold (PAXG) and Tether Gold (XAUt).
That milestone came during a surge in gold prices, fueled by the “debasement trade.” As inflation fears and market uncertainty grew, investors sought refuge in assets tied to real value, a signal that pushed tokenized gold briefly into the spotlight
The Binance founder made it clear that tokenized gold, at its core, is nothing more than an IOU.
He explained that while these tokens exist on the blockchain, they still depend on centralized institutions to store and redeem the actual gold. Those entities, he noted, act as custodians rather than enablers of true ownership.
Zhao emphasized that this setup leaves investors holding a digital promise. Not the metal itself.
What they own, he said, is the company’s word that the gold is there, waiting to be claimed.
Recently, Changpeng Zhao spoke about Bitcoin’s long-term potential to overtake gold’s market capitalization.
He acknowledged the precious metal might have a remarkable market cap of about $30 trillion but Bitcoin is only a decade old with over $2.18 trillion in market value. According to him, Bitcoin’s strength lies in its fixed supply of 21 million coins.
Roughly 19.93 million have already been mined, and that scarcity, he suggests, could drive value higher as adoption continues to grow.