Gold-Backed Cryptocurrencies

Welcome to the Precious Metals Bug Forums

Welcome to the PMBug forums - a watering hole for folks interested in gold, silver, precious metals, sound money, investing, market and economic news, central bank monetary policies, politics and more. You can visit the forum page to see the list of forum nodes (categories/rooms) for topics.

Why not register an account and join the discussions? When you register an account and log in, you may enjoy additional benefits including no Google ads, market data/charts, access to trade/barter with the community and much more. Registering an account is free - you have nothing to lose!

Peter89

Big Eyed Bug
Benefactor
Messages
276
Reaction score
198
Points
113
A forum dedicated to precious metals... a forum section dedicated to cryptocurrencies... and nowhere a thread dedicated to gold-backed cryptocurrencies? That’s unacceptable
There are many projects about gold-backed cryptocurrencies, as one can see from my signature I participate in the affiliate program of one of them so I'm particularly familiar with this one, but this thread is not just about Kinesis.

Imo gold-backed cryptos are good news for gold as they offer it the opportunity to become money within a digital society.
Currently gold is used only as an investment. It is considered as money too but one thing is considering something as money, another one is using it as money. AFAIK nowhere is gold used as everyday money.
I think sound money fans should embrace the opportunity offered by the blockchain technology (still a black box to me) as it allows for gold to be used as everyday money just as easy as one uses fiat currency.

In short, the benefits of PM-backed cryptocurrencies that come to mind are:
- cutting off banks' intermediation in everyday spending (provided a debit/credit card is available);
- cutting off brokers' intermediation in trading PM;
- low entry threshold, allowing low income households to save and invest in PM;
- easiness of investing in PM (only a smartphone is required. No need to travel to the next PM dealer, which in some countries can be located far away from where one lives);
- low trading spreads;
- secure storage.
 
There are quite a few gold backed crypto tokens (in no particular order):
There may be more out there that I'm not aware of.

The Perth Mint in Australia used to offer a gold backed digital token, but the program was discontinued:

PMGT | The Perth Mint Gold Token

The Perth Mint Gold Token (PMGT) has been discontinued.
www.perthmint.com

There have been a few other (non-government) tokens that also discontinued:


Here in the USA, individual States are considering legislation to create their own government run gold backed digital tokens:

Texas to issue a gold backed crypto?

No idea if this bill has legs, but Texas surprises sometimes so who knows... ... Based on the text of Senate Bill 2334, which was introduced by state Senator Bryan Huges (R), and House Bill 4903, which was introduced by state Representative Mark Dorazio (R), the legislators are looking to...
www.pmbug.com

Individual US States push for gold and silver legalization

A bill filed in the Indiana House would take important steps toward treating gold and silver as money and set the stage for the people there to undermine the Federal Reserve’s monopoly on money. Rep. Cindy Ledbetter and three cosponsors introduced House Bill 1043 (HB1043) for introduction on...
www.pmbug.com

It won't be long before some States make one and we'll be following in Zimbabwe's footsteps.
 
Thanks @pmbug
when talking about gold-backed products the first question is whether it's really backed

Everybody knows Tether/USDT, apparently the 16th largest holder of U.S. treasuries globally, therefore probably another too-big-to-fail financial institution.
Few know that Tether issue a gold-backed cryptocurrency, Tether Gold, currently with a market cap of $500M and 7.6 tons of gold as reserves.

This is their website: https://gold.tether.to/
This is their Whitepaper: https://gold.tether.to/Tether Gold Whitepaper.pdf

Nowhere is the word audit to be found.
 
We have an informative thread about Individual US States push for gold and silver legalization
I read that some states, like Arizona, are promoting among others a digital transactional currency backed by gold or silver


Under digital transactional currency backed by gold I can't imagine anything other than a gold-backed stablecoin.
 
The language may vary a bit, but all the State level bills that seek to make gold/silver transactional are working towards that.
 



HSBC Gold Token | New way to own & invest in gold - HSBC HK

Gain ownership of physical gold held in our vault with HSBC Gold Token. Invest with peace of mind as the security is ensured on our private distributed ledger.
www.hsbc.com.hk
 
Found on the Twitters:
More details:

 

They have regular independent audits, so it's better than an ETF.

This is no gold backed currency because it isn't designed to be a currency, i.e. everyday's money.
It's only for investment purposes.

It will help to drive the gold price up by sucking up liquidity, but in terms of Gold Standard it's irrelevant
imo
 
Agreed. It's also tightly controlled and only tradeable for certain HSBC customers in a small geographic region. Even so, if it is a success from HSBC's point of view, it's possible that other banks might copy the program opening more doors for gold investment globally.
 


"Each HSBC Gold Token represents ... 0.001 troy ounce of Loco London gold"
Why is the price of those 0.001 oz determined by the Bank instead of by the gold market?
This is nothing but some gold derivative.
imo
 
Last edited:
What would the transaction fee be for using your gold debt card? And who gets it?
 
I skimmed the transcript. Around 45 to 47 minute mark they talk about the Texas gold backed crypto legislation that is still pending. The guest suggest Kinesis to contact two individuals who are lobbying for the legislation and Kinesis' host says they will reach out to the lobbyists. The Young Pretender (author of the tweet) has misconstrued what was presented in the video IMO. The State of Texas isn't making any deals with anyone before legislation has even passed. $.02
 
Kinesis is collaborating very tight with Citizens for Sound Money, which is one of the main sponsors of this legislation at state level all around the USA.
I think Kinesis know already all lobbyists
 
Last edited:
They would need to revalue spot gold in order for the crypto to have practical everyday use.
 

Gold-backed digital currencies and physical gold business by one and the same company
 
I could see depositing physical gold into an account from which to draw currency, but somebody is going to get charged a fee somewhere either for conversion into local currency or when it's stored and/or spent. Just paying the fee to somebody else instead of the banks and Visa/MC/Amex.

They need to go back to physical gold and silver in circulation, but that will not happen in my lifetime.
 
nickndfl said:
They need to go back to physical gold and silver in circulation, but that will not happen in my lifetime.
Click to expand...

As long as we live in a modern society we will never transact as people did 3 centuries ago.
It's impossible to use pieces of pm as everyday currencies in a industrialised society, just think about something as usual as wire transfers. Imagine the costs, risks etc. associated with sending around pieces of gold and silver.
Wishing to a society to go back to physical pm as everyday currency - if this is what you meant - means wishing them to go back to pre-industrialisation.
 
I disagree Peter. We have the technology now to manufacture metal foil notes (Goldbacks) that work as good as fiat paper notes. It's entirely feasible if people have the desire/will. Derivative structures such as electronic checking or payment systems can be built on top of gold denominated accounts just as easily as they do for fiat. Kinesis is a case in point on that issue isn't it?
 
Commander in Chief PMB!
sorry for the delay. If no tag and no Reply sometimes I miss posts addressing me...

Nick wrote physical gold and silver, I thought he was talking about coins and bars (or granules), not about something like Goldbacks.
I understood him as saying that we should go back to using coins and bars, so I replied that gold should leverage on current technology.

In goldbugs circles it's typical to meet a latent distrust in modern - particularly digital - technology when applied to the monetisation of gold.
I interpreted Nick's wordings as an expression of that distrust.
I'm not a gold historian but I think monetary gold has always leveraged on the technology of its time, which is - imo - what many stackers in their skepticism toward modern financial technology fail to recognise.
 
Peter89 said:
...
Nick wrote physical gold and silver, I thought he was talking about coins and bars (or granules), not about something like Goldbacks. ...
Click to expand...

Goldbacks are physical gold/silver.
 
The point of the Gold Standard is not to save some fiat,
its advantage vs Fiat Standard is not that it works with lower transaction fees.
The advantage of the Gold Standard is to allow people to use money which doesn't lose purchasing power.

I read there are 20-30 millions Americans unbanked/underbanked.
50 millions Americans on SNAP, the food program. Forget Visa, MC and Amex. They have only cash.
When you compare Kinesis with the current banking system it's helpful if you put yourself in the shoes of these people too.
Even more if you exit the USA and consider billions of people around the world whose life depends on the purchasing power of a rapidly depreciating currency.
 
That is why there are more uncirculsted silver halves and dollars than dimes and nickles. Banks kept new rolls in vaults to back silver certificates according to The Coin Guy.

Just think if the BRICS had their own gold depository. It would immediately legitimize the country where it was located, the trading bloc and the currency.

Exports might slow because the currency/crypto would be so strong because everybody would want to own it.
 
You must log in or register to reply here.
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more…