Former Binance CEO Changpeng Zhao (CZ) has dismissed Peter Schiff’s latest plan to tokenize gold on the blockchain, warning that the initiative requires trusting a company to hold and redeem physical gold.
In a recent interview on ThreadGuy Live, popular Bitcoin critic Peter Schiff outlined his vision to launch a gold-backed token. According to him, gold is a more suitable asset to place on the blockchain than Bitcoin, given its proven ability to preserve purchasing power. He asserted that tokenized gold could achieve all the things Bitcoin promises but has failed to achieve.
He revealed that his company, Schiff Gold, is currently developing a platform that will allow people to buy tokenized gold. While the gold would be securely stored in his company’s vault on behalf of investors, they would receive digital tokens representing ownership of the precious metal.
The Bitcoin critic noted that users can trade these tokens and spend the gold’s value using a debit card he intends to launch. Further, he also revealed that holders can redeem the token for physical gold.
CZ Dismisses Schiff’s Proposal
His proposal has ignited discussion in the crypto community, with Binance founder issuing a stern warning about the initiative. In a recent statement, CZ cautioned that tokenized gold does not represent actual on-chain gold, emphasizing that such tokens merely track claims rather than the physical asset itself.
He explained that tokenizing gold requires investors to place trust in a third party to remain operational and honor redemptions, regardless of leadership changes, conflicts, or the passage of time.
As a result, he described Schiff’s tokenized gold concept as a “trust me, bro” token, suggesting it requires trusting a custodian for storage and redemption. Notably, the Binance founder emphasized that this reliance on trust has been the primary reason most gold-backed tokens have not achieved mass adoption.
Schiff Responds
In response, Schiff argued that trusting a custodian to store gold is not a new concept, noting that firms like Brinks have safely held gold for clients for over 160 years.
He asserted that tokenized gold is no different from stablecoins, as both depend on users trusting an organization to safeguard the underlying asset. Since CZ criticized his proposal on trust grounds, Schiff questioned whether CZ is also against the crypto industry.
Meanwhile, CZ’s comment comes days after he forecast that Bitcoin’s market cap will overtake gold’s, currently valued at roughly $29 trillion. However, Schiff does not see this happening. Instead, he believes gold will more likely reach an audacious target of $1 million than Bitcoin. He has consistently called on Bitcoin investors to sell BTC, which he calls “fool’s gold,” and buy the precious yellow metal.
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