The London Bullion Market Association recently closed an invitation for submissions of ideas for how to track the metal as it’s dug out of remote mines, traded by middlemen and sold on to buyers scattered around the world. While the LBMA didn’t stipulate what form the system would take, most of the 25 respondents incorporated distributed-ledger technology in their proposals.
“The outcome will involve the use of technology to help the market to mitigate potential threats to the integrity of the global precious metals market,” the association, which oversees the world’s biggest spot gold market, said in an emailed response to questions. “A decision of which solution to implement will be made in the first half of 2019.”
Markets in commodities from crude oil to diamonds and even tomatoes are looking at using the technology that underpins cryptocurrencies like bitcoin — known to some as "digital gold" — to track ownership. Tracing gold supply is key to preventing metal that funds armed conflict from entering world markets, identifying owners and maintaining security from mine to vault. It’s the latest step to try to modernize an industry that until a few years ago relied on phone auctions to set key benchmarks.
The rocketing value of bitcoin has sparked a raft of me-too initiatives, including initial coin offerings and rebranding of obscure microcap firms hoping to make a killing by adding ‘crypto’ to their names. While markets for other goods have considered tracking solutions that use blockchain, few outside the diamond industry have actually implemented it.
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