Unencumbered Physical Gold Reservoir for Crypto Currency payments systems

yieldqwestyieldqwest New ZealandMember Posts: 3

I am throwing this out there to see if this is something of interest to developers. I am not technically savvy but do understand in detail the frailty of the existing financial system and should there be a real financial stress to the system, ones conversion from crypto to paper may not prove beneficial, especially if multiple crypto currencies are vying for this space. Granted crypto to goods and services may function, but the universe will still seek a standard medium of exchange. In short, I believe there will be a demand for a hard currency (gold) backed crypto currency.

I am working with a group who are creating a unique LBMA (London Bullion Market Association) certified gold fund that buys direct from the refinery. The immediate synergy with Ethereum in my opinion is threefold: 1. That unlike every other gold fund, this fund has no financial intermediaries as such, so no bank or sovereign "bail ins" to which these assets are subject to seizure. It is essentially a vault service in Switzerland. 2. That the Ethereum community can attract, park, and build on payment systems and users prior to the eventual development and launch of an activity. (a reservoir to hold a physical convertible means of exchange). 3. That in the event Crypto Currencies are in demand outside of sheer speculation but as a medium of exchange, this 'store of value" and its audience will be able to function immediately to convert to the crypto currency as opposed to paper currencies whose value proposition may be questionable.

Starting at the "money end" first, I believe a much larger audience of Ethereum users could emerge from the mainstream as this vehicle can serve as not only a store of value but entry point into this paradigm.

Thoughts please?


  • JasperJasper Eindhoven, the NetherlandsMember Posts: 514 ✭✭✭
    Well, you could for instance have a subcurrency, which gets an amount of gold that really slowly decreases, to pay for the storage, and security of that. The problem is, how do you convince people that you will always deliver that gold in return for the subcurrency.(subcurrency is then destroyed because you dont have that much gold)

    Afaik, if you have those two, you basically have the subcurrency that represents gold. But i dont see how to solve that. It is just lumps of metal, lying somewhere. You need inspectors of sorts that can measure the presence of gold reliably and trusted very well by users.(reputation systems again come to mind)
  • yieldqwestyieldqwest New ZealandMember Posts: 3
    Hi Jasper, Yes I believe we have those two. A custodian that holds and stores the gold, which is audited and certified. And a corporate trustee who administers the transactions at arms length, and we then need a fee system to pay for the insurance and storage of the gold so that 1/100th of an ounce = the crypto coin
  • JasperJasper Eindhoven, the NetherlandsMember Posts: 514 ✭✭✭
    In that case, a relatively simple subcurrency could in principle serve the purpose. Though you might have other practicalities, and it depends how much organization you want to do on Ethereum.
  • yieldqwestyieldqwest New ZealandMember Posts: 3
    We would like to incorporate Ethereums platform to power our currency for all transactions. I have approached this issue from the conventional financial markets side based on the assumptions that:
    1. Paper Currencies are entering a period of extreme uncertainty due to reckless monetary policies that are politically vs economically driven note the recent G20 issue on "bail ins" as further proof http://www.examiner.com/article/bank-deposits-will-soon-no-longer-be-considered-money-but-paper-investments
    2. Gold is a clumsy instrument that cannot freely trade like fiat money, only 3000 tonnes are mined each year and merchants cannot trust its integrity without forensic tools
    3. A store of gold with a crypto token attached as a de facto voucher i.e. $12 coins representing 1/100th of a troy ounce in a vault would marry the store of value's limitations with the medium of exchanges limits on trust

    We have already coordinated the gold storage and reconciliation side. We now need to create the rules around the crypto and build the platform for merchants who would prefer a crypto of this nature vs. a bitcoin whose intrinsic value is variable outside of an accepted standard such as the price of gold, or any other hard asset.

    Any takers?
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