Recent crashes in the value of the Argentine peso and of the Turkish lira show what happens when people lose confidence in a government or central bank. Apart from that, the president of Venezuela recently invited people to invest in and be able to buy goods with gold in an effort to combat hyperinflation in the region.
During times of political and economic turmoil, the idea of turning back the years and exchanging or transacting with good old-fashioned precious metals that are not subject to central banks and governments devaluation gets momentum. The transformation of the gold standard has attainable with the introduction of blockchain technology.
Cryptocurrencies remain prone to extreme value instability. The emergence of digital currencies in recent years may have made it easier for people to transact outside of conventional banking structures and escape high fees, but extreme value fluctuations have limited their use to speculative assets rather than legitimate exchange media.
“They’re not really being used as a store of value,” says Ryan Case, chief commercial officer at Kinesis Money. “There have been fantastic developments, but there are significant limiting factors when one considers their use as an efficient means of transaction.”
Kinesis is at the forefront of shaking up this sector by using blockchain technology to reintroduce gold as the currency it once was, thereby offering cryptocurrencies the stability they need to grow into a legitimate alternative to fiat money.
Kinesis is a monetary system based on a 1:1 allocation of precious metals, gold and silver, offering an alternative to fiat currency whilst bringing stability to crypto currencies
Kinesis digital currencies were created by the Allocated Bullion Exchange (ABX), an international marketplace developed in 2011 across seven global locations for the trade of physical precious metals, gold and silver, i.e. two of the most secure and definable store of value.
“We’ve combined the knowledge and experience we gained from that, as well as the infrastructure we developed with ABX, with the advent of blockchain technology and the introduction of cryptocurrencies,” says Mr Case. “Doing this has given us some significant advantages against other cryptocurrencies in the gold space.
“I can’t do much with a kilo bar of gold that is stored in a vault somewhere. I can’t monetise it and I can’t access the liquidity in terms of the dollar value that it represents. But we saw the introduction of cryptocurrencies, and combining a traditional asset such as physical gold with a digital currency, as a great opportunity to return to being able to transact gold easily and efficiently – using it as a medium of exchange.”
Kinesis has implemented a multi-faceted yield mechanism to allow users that send, spend and transact on the Kinesis Blockchain Network, to get rewarded depending on how they participate.
For example, depositing physical gold into the Kinesis Vault Network via ABX, converting it into Kinesis currencies (aka „minting“ Kinesis stablecoins), and then sending, investing, or transacting them qualifies you for a Minter yield, while others may get a Depositor or Holder yield.
“All this is designed to bring metal into the Kinesis Monetary System and then get it moving,” says Mr Case. “We don’t want to have something that people are just holding in the way we’ve seen with bitcoin. We’ve developed this to facilitate trade.”
Kinesis opted to create a proprietary fork of the Stellar Blockchain Network to enable extremely fast transaction speeds and a truly scalable global monetary system. The Kinesis debit card, meanwhile, allows instant conversion of Kinesis’ currencies into fiat currency anywhere in the world where Visa or Mastercard is accepted.
Kinesis’ goal - according to Mr Case - is to create transaction velocity and trade volume. From each transaction, the system collects a 0,45% transaction fee, thus increasing the fees pool from which the users’ yield generates.
You can consider it really as an evolution of the gold standard, as gold and silver have been put on to the blockchain to create cryptocurrencies allowing people to instantly and efficiently send value around the world.