The gold mining and distribution industry has inherent vulnerabilities which leave it open to disruption and mismanagement. Many experts warn that crucial infrastructure systems may be vulnerable to ransomware attacks, which is why blockchain is being used to track and prevent it.

Why Is The Gold Sector So Vulnerable?

The gold market is valued at $7 trillion and is known to be cash intensive. Both currency and gold transactions can easily be made anonymous and while the precious metal does offer excellent returns, it inevitably attracts shady characters who desire to use it as an exchange medium. Additionally, gold is very fungible, which means that it is easy to smuggle and trade.

It can also be melted down if needed and then disguised as virtually anything, which makes it simple to extract from official supply chains and move across borders. While virtual gold has been touted as an alternative, it too is susceptible to exploitation. Since the gold market in general has depository certificate requirements, these might be falsified and or traded in an illicit manner.

Ways in Which Blockchain Can Improve The Gold Sector

The primary way in which blockchain can improve the gold sector is by producing records which are fraudulent proof. It can be used for tracking asset origin and distinctiveness, as well as its movement and custody chain. This is because blockchain incorporates distinct digitized identifiers which can’t be edited or backdated. This data is indisputable and thus provides both trust and transparency for multiple party event visibility throughout the entire supply chain. Blockchain can also be used for:

• Tracking packages, receipts and shipments
• Preventing ransomware attacks
• Assigning digital identities
• Implementing tokens which are non-fungible
• Integrating distinct verifiers within IT security systems that are enterprise level

Mining and Recycling

While blockchain won’t be able to completely prevent criminals from melting gold down and then trading it within the grey or black market, it will be more difficult for this gold to reenter official chains of supply. This is because any gold entering a legitimate supply chain will be subject to strict physical audits and must match the digital records.

Refining and Retailing

Blockchain can be applied for tracking gold from the original source, which provides the advantage of a ledger which is immutable. Should assets gain entry into a gold refining chain from sources which haven’t been tracked inside an immutable ledger, these assets are flagged for further scrutiny. Any assets which are created during smelting will receive a unique digital id that enables them to be continually tracked for packaging, shipping and receipt.

Retail gold dealers can utilize blockchain for integrating cloud infrastructure and enterprise security. This means every transaction will have greater transparency with enhanced tracking. This is especially useful to bigger retailers since they must remain in compliance with security mandates and can generate more accurate audit trails.

Blockchain and Gold Investment

Blockchain can also benefit gold investment since it empowers investors to track the precious metal from the mine all the way to the vault while ensuring their purchases are not targeted by ransomware. There are also opportunities for tokens which are gold backed as well as cryptocurrency.