In it he discusses “colored bitcoin” by which he means a situation where "You would buy, say, physical gold at a gold shop. The latter then issues a colored bitcoin, which represents the ownership of physical gold. The colored bitcoin is, economically speaking, a gold substitute (a money substitute, fully backed by physical gold). It can be used for making purchases and, upon the wish of its owner, it can be redeemed into physical gold at the gold shop at any time."
But what he does not do is discuss the elephant in the blockchain, that is, the fact that all transactions will be visible as part of the blockchain, which makes such transactions highly traceable.
There is an old Swiss proverb, "Gold has no smell." It can mean a couple of things, but one meaning is that gold can not be traced. It is one of the great beauties of gold, silver and a characteristic that even paper money has (Though paper money has other defects that gold and silver don't).
Linking gold with a blockchain creates an odor that can not be washed away.
The Australian Financial Review recently explained why governments and banksters are taking a liking to the blockchain:
This technology is offering regulators a bird's-eye view into activity in certain markets that they never had before. As such, distributed-ledger technology is actually an enhancement to transparency, rather than a mechanism for bypassing it.When the next FDR comes along who decides to confiscate gold, do you want to be holding physical gold or a "colored bitcoin" that is on a distributed-ledger that the next FDR can easily see?
Mixing gold and the blockcahin is a very bad idea.