In an effort to manage Bitcoin volatility for my personal financial needs I have decided to put some (about 30%) of my savings in physical gold by means of ETFs at the moment.
While other asset classes like stocks and bonds are currently in the recession phase, gold lets me make regular cash-outs not taking it from Bitcoin part, also hedging against inflation.
In an effort to safeguard this part of savings by avoiding dependence on a broker I am now figuring out a possibility of putting it in Paxos ERC20 gold token (I am not paid for advertising it and not holding currently any of it).
It seems to be a reliable as:
- I trust Interactive Brokers which partnered with Paxos for facilitating crypto trading, making it a "web of trust" case.
- it has a largest market cap among tokenized gold tokens and I hope that at least some institutional-size owners made a due diligence on it (poor argument with no direct causation, but still).
The main issue for me is with the blockchain on which the token is based - Ethereum blockchain (the token is also seen in BNB Smart Chain and Solana, but they seem to me even less reliable than Ethereum).
As per my current research, there are several issues with it (please correct me if I am wrong):
1. Ethereum Full Nodes seem to be not actually full. Despite the fact there is information on the internet that Ethereum Archive Node containing all the historical states can be derived from Ethereum Full Node, making the Full node a reliable one, there is a following statement on Ethereum official web-page:
"All states can be derived from a full node (although very old states are reconstructed from requests made to archive nodes)." source:
https://ethereum.org/en/developers/docs/nodes-and-clients/#full-nodeI see a fundamental flaw in it - the first part tells us about "all states" and the second part tells us about "not the all states".
2. Newly adopted Proof-of-Stake (PoS) consensus mechanism is making the network much less secure as it is much easier to concentrate the voting power in hands of a coordinated group of people.
So based on these two points I have concluded that for now it is more safe to hold rights for physical gold in the traditional financial system by means of a broker and an exchange traded fund.
Could you share your opinion on whether the above write-up contains flaws? Is it relatively safe to keep some portion of your assets in ERC-20 token? Does the traditional financial system with brokers and exchange traded funds provide more reliable infrastructure for holding rights for physical gold?
Thanks in advance.
