Why digital gold and silver.
Why we chose precious metals to form the core of our monetary system.
The problem with money is that it used to be backed by the gold standard. Gold, one of the safest and most reliable stores of value the world has ever known.
After the abolishment of the gold standard in 1971 all money printed, lacked tangible value, leading to a tremendous amount of fiat money being printed, which in turn has lead to a devaluation of the dollar and a correlated increase in public debt; creating the modern banking system we have today.
Trapped in perpetual debt and with inflation and debt eroding the value of your money.
Central banks’ demand for gold soared to a multi-decade high of 651 tonnes in 2018.
– According to the World Gold Council
Defeating Gresham’s Law
A fundamental economic principle, known as Gresham’s law, has been a big problem facing the adoption of gold as a usable currency.
Gresham’s law states that bad money will drive out good money, which can be illustrated using gold and paper currency as an example.
Because the perceived value and nature of gold is seen as good money, people will be incentivised to hold it and save it as it is a safe and stable store of value, and spend their less valued paper currency instead.
Digitalising gold and incentivising its use with a fee-sharing yield system that rewards users for their participation by distributing the wealth of the system, defeats Gresham’s law and drives mass adoption.
The inflation problem
When the total currency supply in an economy increases too rapidly, the value of the currency often decreases. This often is a result of central banks printing more of that currency, diluting the supply.
With worldwide debt increasing at an alarming rate, the amount of new money created by financial institutions is only adding to the inflation crisis.
When situations get really bad, in many instances throughout history we have seen scenarios of hyperinflation, very high, rapid, and continuous inflation. In a hyperinflation situation, the prices of goods and services in an economy quickly rise to a level so high that they become difficult, if not impossible to afford for most people.
Hyperinflationary episodes have occurred multiple times over the past century – 55, to be exact – as the world’s nations have experimented with fiat currencies backed by the full faith and credit of the governments that issue them.
On more than one occasion, that full faith and credit has been misplaced – and holders of unstable currencies have been left empty-handed in countries all over the world.
Look at the infographic below which details which countries have experienced hyperinflation
With the current volatility experienced by currencies around the world as a result of political uncertainty and rigid banking infrastructure, many are returning to the safe haven. During periods of a financial crisis, gold prices tend to skyrocket as a result of the instability.
Stable store of value
In the 1950s the average price for an ounce of gold was $40.25, equally a high-grade suit would cost you between $40-$45. Fast forward to 2019 and the price of an ounce of gold (as of August) is around $1490, coincidentally, if you were to buy a suit of equal quality it would cost you around the same today.
Now let’s imagine that you held on to that $40 you had in 1950, all the way up until 2019. That $40 now no longer has the same spending power it once did, and wouldn’t purchase you the same quality suit.
This is called currency depreciation and is a byproduct of inflation. Whereas the ounce of gold (being a stable store of value) has retained its spending power, and thus its value.
What are the benefits of gold?
- Gold has maintained its purchasing power for thousands of years. Gold cannot be created by individuals or institutions.
- Gold is one of the most reliable and durable assets and will still be here for thousands of years to come.
- The value of gold is universally accepted by everyone at any time. Gold is held in independent, secure and insured vaults, protecting you from systemic risks and financial crises.
- Holding your savings in gold offers protection to inflation. Your gold holds its value year after year.
Problems with owning gold?
- Purchasing gold can be expensive.
- Storage fees associated with physical bullion can be quite expensive.
- Micropayments in physical gold can not be made.
- Holding large amounts of gold is difficult and expensive to transport.
- Gold does not provide a competitive yield as an investment.
The Kinesis solution
We have addressed the five problems above by:
- Allowing as little as 1 gram and 1 ounce units to be purchased on the exchange.
- Eliminating precious metal storage fees.
- Digitalising your metals to allow micropayments.
- Send gold and silver anywhere in the world in 2 seconds.
- Be rewarded monthly, through fee-sharing yield structures.
The return of gold in modern commerce
With the tokenization of physical precious metals and the addition of a velocity-based yield, Kinesis currencies combine the best of both precious metals and blockchain technology. With the customer, reaping the reward of a continuous stream of passive income.
We felt it was unfair that money is prone to depreciation in ways we have no control over. We believe the ready-made solution has existed for thousands of years; it just hasn’t had the advantage of technology to allow it to be used in modern life – that solution is gold.
We built Kinesis to reintroduce gold as money, as a global currency that can be used in today’s electronic payments world and be spent via debit card. By uniting tried and tested gold and silver with the latest innovations in Distributed Ledger Technology (DLT) to register ownership of physical bullion in digital form, giving the user the best of both worlds.
Kinesis currencies are representative of real physical gold and silver bullion, stored for free in fortified vaults all around the world, on a 1:1 allocation. Eliminating counterparty risk and ensuring your precious metals retain their value, year after year.