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A reason to return to the gold standard

I know, speaking about returning to the gold standard can seem archaic, however, something that really grabbed my attention recently was an article covering an IMF blog post. In this article, two IMF economists discussed the introduction of e-money as a way for central banks to implement as negative an interest rate as necessary for countering a recession, without triggering large-scale substitutions into cash. Perhaps it stood out as something to take note of because of the many other developments taking place around this. E-money to implement negative interest rates is being explored while, despite negative interest rates already in place, the European Commission just slashed its 2019 growth forecast for the 19-nation euro-area economy from the 1.9 percent it projected in November to 1.3 percent. So, with European growth slowing but negative rates already in place, might we see a case being put forward to take rates even further into negative territory in an attempt to stimulate economic activity? But at the same time, with e-cash in place to stop one from taking cash out of the bank and putting it under the bed. Is it also any surprise then that the ECB recently posted this video on their Twitter about how QE helps reduce inequality? To the US, then, where the San Fran Fed wrote earlier this week that ‘allowing the federal funds rate to drop below zero may have reduced the depth of the recession and enabled the economy to return more quickly to its full potential.’ With the Fed funds rate at 2.5%, rates are still low by any historical standard, giving the Fed less room to move in the face of any downturn. At the same time, the Fed has gone from expecting to hike three times in 2019 a few months ago to removing all references to future hikes in January’s FOMC comment, while noting the cross-currents that the economy is facing. A decidedly dovish turn. Will the Fed need to turn to negative interest rates to stimulate growth, too? If central banks are considering the use of digital currencies to enforce negative interest rates on depositors, what are the other options? Kinesis Money could be one answer. Kinesis is creating two digital currencies based 1:1 on physical, allocated gold and silver. Kinesis will charge a 0.45% transaction fee for the use of its digital currency network, but redistribute a portion of these fees as a ‘yield’ to further incentivise the use of its system for transactions. These two currencies will allow one to access day-to-day spending outside of the banking system and remove exposure to fiat currencies, by giving liquidity to gold and silver. It will do so through the use of innovative blockchain and exchange technology, and a debit card attached to the Visa network. Significant technical developments have already been completed and this year is set to see the release of a new monetary system that aims to change the way people see and use gold, Kinesis Money. So perhaps, it is time to return to the gold standard, digitally. Any opinions, news, research, analyses, prices or other information contained in this article is provided as general market commentary and does not constitute legal, tax, accounting or investment advice.

Zubair Bukhari
Zubair Bukhari

20/02/2019

When the Dollar Crashes, the Gold Standard Will Emerge

All currencies used to be backed by the value of gold - the Gold Standard. Then, economic mechanisms developed over time to a point where a handful of people had the means to conjure trillions of dollars, euro, renminbi, and pounds out of thin air. For example, in the 1971, brutal Ugandan dictator Idi Amin raised military spending by 500%, which spiked inflation 700%. When an ex-finance minister warned that Uganda was headed towards bankruptcy because of bloated military spending, Amins answer was "Print more money." Amin doubled the money supply between 1976 and 1978. On the ground, gasoline cost $39 per gallon and sugar $5 a pound, with the monthly minimum wage set at $30. What was once the dastardly action of a brutal African dictator is now mainstream. In the United States, Federal governments issue debt to pay for their expenses, and then print more dollars to pay off trillions of debts. Debt is at the heart of the scheme: In the US, banking systems were deregulated during former President Bill Clinton's term in the 1990s, which heightened debt's influence over the country's economy. Since then, European vassals followed on through the early 2000s. Such deregulation has also given more power to banks by simply handing out more debts to governments, companies, and individuals. As a result, around 97% of all the money circulating in the West comes from banks through debts and loans. With that said, it is important to note that banks make a huge portion of their profit from interests that are generated from loans. This means that banks are basically earning and generating more cash that does not offer real value to the economy. Now, as large amounts of this money are in circulation, one could easily see a chaotic problem when banks would start recalling outstanding liabilities or debts. As history shows, this economic collapse timeline has begun building up since the end of World War II, reached its peak during subprime manufacturing crisis from 2007-2009, and was expected to cause a global economic crisis that could collapse around 2016 or 2017. Such an event could have left a huge economic impact on a global scale, causing poverty, famine, and even death among many populations. The ruling elite class, on the other hand, would still remain on top, pushing to begin the monetary cycle again from square one. Now, allowing wealthy people to be in control of everything and keeping the public uninformed can cause the cycle to repeat continuously. Why Money Has Value Money can maintain its essential functions only if people have a high level of trust in the monetary unit they are using as a stable store of value. In the event that this trust is lost, the people would give up using the monetary unit, either suddenly or gradually, in favor of something else. Based on historical records, "bad" money would drive "good" money out of circulation, especially when faith in its stability is lost. Though it might still be used in most transactions, especially when it is the mandated legal tender, it will no longer be trusted as a store of value. In this case, people will then hoard the "good" money as the superior store of value until the "bad" money is finally totally abandoned. Then, a return to using the "good" money entirely becomes possible. Take a look at this: People are now using traditional money. Then, cryptocurrencies backed by gold are rising in popularity. Jumping on the bandwagon, some people are then investing in gold coins and using cryptocurrencies for their online transactions. While it does not seem that cryptocurrencies will entirely replace the traditional money that we are using today, time might come that they will. This monetary cycle, which is good-bad-good, has been happening throughout history. What Is the Gold Standard? The Gold Standard is a system where nominal exchange rates between participating countries are fixed with the value of gold. So, if a gold ounce is valued at 20 US dollars and 10 British pounds, then 2 US dollars should be exchanged for 1 British pound, as a fixed exchange rate. Under the Bretton Woods system, the US was supposedly following a gold standard in implementing its monetary policy, while the rest of the world set their exchange rates in US dollars. While it was impossible for the ordinary people to redeem their US dollars or other money into gold, the central banks can do it, theoretically speaking. Also, countries can participate in the Gold Standard for a time, leave it, and return it, just as it is possible for them to fix their exchange rates against other currencies. Take what Hong Kong did with the US dollar, for example: Like what other emerging market countries did during the 1990s and 2000s, the country had fixed exchange rates with the US dollar, but then left it during the Asian financial crisis. The fixed exchange rate economic system implies that governments do not have the power to completely set domestic interest rates. This is what is known as the "impossible trinity" in economics. With such, one cannot have free capital movement between the country and other countries, fixed foreign exchange rates, and independent monetary policies at the same time. During the Gold Standard era, which covers the early 20th century, this type of system meant that monetary policies were set according to international capital and trade flows. It also entailed that during a crisis where a country is having a capital flight or a current account deficit where the central bank is not also able to cut interest rates to fight the crisis, interest rates are forcibly raised to fight the capital flight, worsening the recession. However, this was not an issue among the developed countries in the early 20th century. But when active monetary policies were needed, there were great incentives to leave the Gold Standard. This happened during World War I: The costs of war were huge and could not be financed solely by the command economy and debt issuance. As a result, some seigniorage, where governments issue currencies, happened. This was serious in many countries, especially in Russia as it led to inflation. For other countries, it increased their debts more because of more developed economies, such as the UK and France. As it could not be reconciled with the Gold Standard, a passive monetary policy was needed, though it is not an active one. Then comes the Bretton Woods dollar-gold system, where the US dollar was convertible into gold and the rest of the world pegged their currencies to the US currency. Now, countries were able to periodically adjust that peg to gain a comparative advantage, helping with their exports. The system was especially helpful to European countries to help in their recovery from the devastation of World War II. The system worked and was relatively stable from 1945 to about 1965. What became the ultimate doom of the Bretton Woods system was the growing lack of faith in the willingness of the US to actually convert their dollars into gold, which resulted in large government deficits under the leadership of President Lyndon B. Johnson. He paid for both the mounting costs of Vietnam and his Great Society initiatives. In a monetary system that is backed by gold, government deficits must be paid for by also borrowing such precious metal. Obviously, it was expensive. And, as deficits grew, the world gradually lost faith that the country was actually willing to pay for everything with gold. Unlike switching to a non-gold based dollar, inflation would just eat away the real debt burden, which is politically more flexible and practically much cheaper. This loss of faith further grew as the market price of gold diverged from the official US conversion rate. Hypothetically, a country would be able to convert its dollars into gold and then sell the gold for dollars, making a profit in the process. However, all fixed-rate commodity-backed systems would be put in danger with such a divergence taking place. And, as international trade grew during the post-war period, tensions between the market rates and fixed conversion rates also grew. So, as the willingness to convert dollars into gold grew, other central banks eventually showed interest in converting their US dollar holdings into physical gold before America's stock of gold depleted. The first country to request such a conversion was France, but other countries were privately showing the same interest. Like any other bank, central banks are obliged not to lose money. Considering the situation, they were considered to be only acting in their best interests. When France officially requested such a conversion, it signalled a clear sign that the dollar-gold standard will fail. So, President Richard Nixon, under his leadership, made one of the most shocking economic measures taken by the US government in history—the unilateral cancellation of direct international convertibility of the US dollar to gold. The decision was based on the notion that there would have been no point in converting dollars into gold for France, as all other dollar holders would have followed. As a result, the US would have shipped all of its gold to other countries, which would also end up the country suspending such conversion anyway. As a result, it was scrapped. Why did America abandon the gold standard? In the early 1930s, the US government faced a huge problem of the Great Depression where they were left with little influence over the economy, resulting in large rates of unemployment and severe deflation. This pushed the US and other government entities to raise interest rates to prevent draining the gold reserve, as it could dissuade people from cashing in their deposits. Problem is, such move made it more difficult for people and businesses to borrow cash. To solve such dilemma, President Franklin D. Roosevelt detached dollars from the value of gold, thus helping the government to release more money into the economy with favorable interest rates. On March 3, 1933, the President closed the banks for 10 days. When they were reopened, all of the gold has been turned in to the Federal Reserve. This kept people from redeeming their dollars for gold. A month and 2 days after the banks were closed, all Americans were ordered by the President to turn in their gold certificates and coins and have them exchanged for paper currency. Gold bullions, coins, and certificates were given a set price of $20.67 per ounce, and they must be all returned by May 1, 1933. 9 days later, the gold reserves at Fort Knox were created through the $300 million in gold coins and $470 million in gold certificates that were delivered to the Federal Reserve. According to the author of “Lords of Finance” book Liaquat Ahamed, “Most economists nowadays agree that the separation from gold makes around 90% of the reasons for US’ success out of the Great Depression.” Until 1971, USA allowed other countries’ government entities to exchange dollars for gold. However, President Richard Nixon stopped such practices to prevent foreigners from digging through the American gold reserve. Gold's set price increased to $35 per ounce in 1934 and continued until 1971. On August 15, 1971, President Nixon announced that the US will no longer convert dollars to gold, fixed price or not. This marked the end of the gold standard. It wasn't until 1974 when Americans are allowed to own gold bullion again after President Ford signed the legislation. Despite the US abandoning the gold standard, gold remains an asset value, helping protect investor's assets. Benefits of a gold standard The events mentioned earlier have turned the dollar into pure fiat money, or cash without any valuable assets backing it. Thing is, the history has tons of examples that prove fiat money almost always turns back to its base value of zero. Like the Denarius of Ancient Rome, for instance, in 50 A.D. denarius coins were made of pure silver. Nonetheless, Roman emperors have reduced the silver content of denarius through time, until it only contains around 0.05% of the precious metal. After the collapse of Rome, the low value of denarius coins made them unacceptable for various goods and services, thus making them basically worthless. It also happened to the old currencies of China, France, Germany and other countries throughout history. The symptoms of fiat money losing its value is already observed with dollars as well. This posed a serious threat towards dollar and other currencies pegging on it that couldn’t be ignored. This is where investing in gold coins comes as an important consideration. With a gold standard: A money's value is backed by a fixed asset Provides the economy with a stabilising and self-regulating effect Money can be printed as much as the same amount of gold that the government has Discourages inflation, debt, and government budget deficits More productive nations earn more gold when they export, for example, and boost investments and reserves Unfortunately, countries without any or has little supply of gold are at a competitive disadvantage. But even those that do like America may not want to return to a gold standard because of its negative impact on the economy. For instance, the US government will no longer have the complete freedom to manage the economy, constricting its ability to do so. In times of inflation, the Fed can't reduce the supply of money by raising interest rates. But gold is in debate again. The coming gold standard There are many available write-ups talking about the rise of gold value, and how it would continue through the years. It's even expected to go beyond the value of fiat currency units, as the latter loses its perceived value. Such observable factors could tell a lot about the new gold standard coming later on, which people definitely need to prepare for. This is especially true that such monetary system significantly varies from the current fiat currencies the world commonly has. The gold standard will not merely change the physical money, but will also affect finance on a large scale, which includes banking and businesses. It could be largely beneficial for some countries, industries, and markets, but could severely harm others as well. From there, one could see that asset allocations and investment strategies must be modified to fit in the new system, such as new methods of investing in gold coins. But it's only a matter of time before a new global gold standard will arrive. Everyone should brace for a possible rough transition and their stars if things happen smoothly. Investors and businesses best prepare for the coming of the gold standard, finding ways to protect their wealth and to flourish through the new monetary system. Because failure to prepare could result in assets lost and generation of hard work down the drain. There’s a huge risk accompanying the arrival of the new gold standard, and it would leave people with no choice than to throw zero-value fiat currencies as a thing of the past. It would be best for people to do practical preparations to survive the transition and through the new monetary system, especially because the public couldn’t rely much on government entities for help. After all, government officials will probably dilute the system for their advantage, instead of providing sufficient assistance for the people in their countries. Big business using blockchain Tracing back, the original Bitcoin paper was published by Satoshi Nakamoto in 2008, and it took around a year for the first Bitcoin to be made. Subsequently, it took more years for the technology community to conceptualise the blockchain system, much more its actual completion. Nonetheless, Bitcoin and its related concepts broke out after media organisations like Newsweek and New York Times made their investigative reports in early 2014 about the huge potentials of the said cryptocurrency. In just a year, the largest central banks all over the world, (which includes the Bank of England), began their research and published papers on the potential of blockchain technology. But the paper is focused more on the system that runs the Bitcoin, instead of highlighting the crypto itself. After which, it has slowly become common knowledge that the blockchain technology could severely affect various transactions of finance and commerce worldwide, which include various financial technologies. Due to this, start-up businesses and banks have tried to find ways to cope up with the innovation brought by blockchain technology. The goal is to incorporate blockchain throughout various departments or divisions and to streamline different processes with it. Aside from merely coping up with the new technology, businesses and banks also aim to provide efficiency with their operations, especially for the convenience of clients, customers, and partners. Kinesis benefits Knowing all the possibilities of an economic catastrophe in the not-so-far future, you should definitely find the best ways for you to prepare yourself for the coming of the gold standard monetary system. Of course, if it’s all about the circulation of real gold back into the economy, the best way to prepare is to invest in gold coins before the big economic crash. This is where Kinesis comes in. Kinesis is one of the best ways for you to survive the possibility of a huge economic meltdown because of the new gold standard and could help you flourish through and after the transition. It is a cryptocurrency backed by real gold, running on blockchain for optimal benefits like: You can easily buy gold online through its platform, allowing you to own a certain amount of real gold for each crypto coin you have. Your gold is safe in the Kinesis reserve, giving you the assurance of having enough “gold backed coins” through and after the transition phase of the new gold standard. You don’t have to worry about fiat currencies running out of value since you already have your own currencies backed by gold in the Kinesis reserve. Crypto coins of Kinesis runs on the blockchain, which basically means it’s on a reliable and safe platform for virtual transactions and storage. You can use crypto coins of Kinesis on various transactions right away. If you have real gold in the Kinesis reserve, you can claim your gold anytime you want. These are just a few of the benefits that Kinesis can provide you with, before, during, and after the global economic crash. It is the ultimate stablecoin because it is backed 1:1 by physical gold and silver, depending on whether you have KAU or KAG, respectively. Gold is stored securely on third-party vaults, eliminating counterparty risks.

Zubair Bukhari
Zubair Bukhari

03/01/2019

The Kinesis Vision - An Interview with CEO Tom Coughlin

The Kinesis CEO, Tom Coughlin was recently part of an extensive US tour to meet with investors. During this time, Bart Chilton of the finance show “Boom or Bust” took the opportunity to interview the illustrious CEO of the rapidly growing institution, Kinesis. Coughlin was able to express his vision for the future of Kinesis and talk about the exciting developments Kinesis has had over the last several months. Kinesis Overview The cryptocurrency markets have the attention of the entire financial world. From the richest nations in the world to small independent countries, everyone is wondering how to proceed in this new rapidly expanding financial and technological sector. This involves new legislation, laws and tax plans and investor regulation for each country. Blockchain is quickly proving to be a valuable tool in most industries, and countries everywhere are figuring out how to adopt it for everything from government filing, to the tracking of goods along their supply routes. This is in addition to some of the biggest business corporations in the world like Walmart and Amazon. With many advances in the cryptocurrency and blockchain industries happening every day, one particular facet is still yet to be fully harnessed. The cryptocurrency market is in desperate need of a proper stablecoin that is truly reliable and from a well-established and trusted source. As described in the white paper, “The vision for Kinesis is to deliver an evolutionary step beyond any monetary and banking system available today.” Kinesis is in one part, an upcoming cryptocurrency project that promises to be the most efficient and trusted stablecoin in the market today. They are preparing to launch two digital currencies that will be backed by precious metals like gold and silver. These are time-tested stores of value that have never lost prominence in the centuries they have been used for commerce, and investment worldwide. Kinesis has several tokens they are launching, their primary currencies being KAU and KAG. These two tokens are backed by gold and silver, respectively. This is in addition to their KVT token which is currently being offered in their public sale. The KVT token is their “Kinesis Velocity Token.” This is an ERC20 utility token for the Kinesis network. Holders will be long-term investors and believers in the Kinesis project and will receive a proportional 20% share of all the transaction fees that transpire on the Kinesis network from the use of the KAU and KAG tokens. This is in addition to 20% of all commissions from the Kinesis Commercial center or KCC. Coughlin explains on Boom or Bust that Kinesis is more than just a cryptocurrency or stablecoin. It is a full monetary system with several tiers that has extravagant benefits to those that choose to be a part of their institution. “It’s secure and efficient and rewarding, really for the benefit of all both collectively and individually.” How Kinesis Works When you look into the inner workings of Kinesis, you will find a multi-layered system that has been specifically designed to match almost every individual need of the consumer in the rapidly growing crypto space. Kinesis has done its market research from top to bottom and has a system that offers much more than any competitor in crypto, be it stablecoin or otherwise. Being developed and launched right now exclusively for the Kinesis platform, is everything from a sleek new proprietary crypto wallet, to their own crypto exchanges, to even a Kinesis debit card. The debit card is linked directly to your Kinesis wallet, making your Kinesis tokens spendable anywhere in the world, even where cryptocurrencies are not yet accepted. Coughlin explains in the interview that Kinesis has a “highly unique sort of two-tier market structure.” The top tier is the primary market where anyone interested in using the Kinesis platform can go to mint and create their own cryptocurrency tokens that are backed by gold and silver. Essentially allowing anyone in this new market to create their own digital money, and thus be their own central bank while cutting out the middle man. In these times where distrust of legacy financial systems is growing, this is an attractive concept for many people. The second tier is the interaction with the blockchain where gold and silver are truly brought into this new digital age. The Difference between mining and minting When asked by Chilton about minting, Coughlin then explains the difference between Kinesis’ system of minting and mining which is used by the majority of other cryptocurrencies. Mining is the system used by other cryptocurrencies to create new tokens by solving very difficult mathematic algorithms with your mining rigs. This is a very extensive process that needs very hi-tech computer chips to do. This process is also incredibly wasteful as far as electricity is concerned. It is estimated that the total mining worldwide is comparable to the annual electric consumption of a small country. Minting, however, is a conversion of fiat currencies into the new Kinesis tokens, KAU and KAG. Coughlin explains “the gold is already above ground, it’s already there, so it’s really a conversion between another currency into basically a gold currency.” This is the real heart of the Kinesis system. No wasteful mining that depends on a mining pool centralized in China. Anyone can mint their own cryptocurrency with Kinesis by converting fiat currencies into these Kinesis precious metal coins. The coins KAU and KAG are backed on a 1:1 ratio. This means one gram of gold to one KAU coin and ten grams of silver to one KAG coin. KAU and KAG refer to the chemical names of gold and silver on the periodic table of elements. When someone wants to create these coins, they utilize Kinesis’ KCX or Kinesis Currency Exchange. When purchased with fiat currency, or alternatively bullion holdings, the Kinesis coins are then emitted into their Kinesis wallet at the same time. These coins can then be used immediately. Another great aspect of the Kinesis system is the bonus “minter yield.” This is in addition to three other types of yield that Kinesis offers. These yields bring added value to users and continue to flesh out this multilayered system that benefits active users. Minter yield: The person who mints the actual coins receives a five per cent return of the transaction fees that transpire on the Kinesis coins they create and then use. This is a great bonus that continues to pay out for the lifetime of the coins. Holder Yield: Kinesis coin holders receive a fifteen per cent share on their coins that comes from the transaction fees on the Kinesis network. This is calculated on a daily basis and credited to the associated e-wallets every month. Depositors Yield: This yield is a five per cent share of transaction fees on their first deposit and then the use of the coins from their wallet. Recruiter Yield: This final yield is variable referral bonuses to for bringing new users to the kinesis system, be it individuals or corporations. Gold As an Investment Throughout History One great point that Coughlin touches on in this interview is that gold is the greatest store of value throughout history. Gold carries with it the reputation of a solid stable asset and has for centuries. One major factor that has turned off new investors in this digital space is the intangible nature of these new digital currencies. Older investors cannot understand the concept of money that isn’t backed by anything, and the fact that most cryptocurrencies have no real backing is exactly the reason for the notorious volatility they experience every day. Kinesis understands this dilemma well and that is precisely why they have chosen to use gold and silver as their backing currencies for the kinesis platform. “We are focused on what makes money successful, we’re talking about gold, it’s the greatest store of that the world’s ever seen.” Combining gold and the blockchain Kinesis is leading the crypto universe in gold and blockchain integration. It is finally time that gold comes into the digital age in a way that is safe against hacks, fast and cheap for users, and has all the features that make cryptocurrencies so attractive to users. Coughlin describes the second tier in the Kinesis system as a “highly efficient rail system.” He is referring to blockchain technology and all the advantages this brings to the gold markets. As Coughlin puts it, when you mint the Kinesis cryptocurrencies through the KCX exchange, the gold or silver is then submitted into the blockchain. “So that’s where we make it an efficient medium of exchange ultimately to be able to transmit or transfer value between different parties within the blockchain system.” Fast global transactions Gold has been the same for all of history. The medium in which we exchange it is what is changing. Gold cannot be moved cheaply and safely. With this Kinesis integration, gold will be as fast and easy to move as any other cryptocurrency. The core principle of cryptocurrencies as written in the bitcoin white paper is a peer-to-peer electronic cash system. A simple concept that unfortunately, bitcoin has failed to provide. Kinesis will fill this role in new and exciting ways. Even before the Kinesis exchanges and the debit cards or anything else, it starts with peer-to-peer transactions. For Kinesis to be successful, transactions need to be fast and cheap for all users, all the time. To ensure this, Kinesis chose the best network to fork from to ensure these needs are met. In the end, Kinesis decided to fork from the Stellar XLM network. Stellar is well known for it’s speed in processing transactions. Following a number of tests and experiments, it is proven that the Stellar network was able to process between 3000 and 4000 transactions per second, a good starting point for Kinesis. This is a stark difference from the bitcoin network which processes a mere seven transactions per second. Another big detail that the Stellar network is known for is its consensus vs mining model. Stellar does not use mining in the way that competitors like Bitcoin or Litecoin do. Stellar uses a consensus model which requires a specific amount of nodes to reach consensus for transactions to be passed onto the network. The Kinesis network will utilize this feature. Kinesis will ensure that external parties cannot try to say, add false nodes to the network. This will be through a process where consensus is reached from trusted nodes on the network only. Mining is also risky when considering how it is essentially a technological arms race. There is potential for centralized mining pools to take over the majority of the mining power and therefore the network power by having more miners than competitors. This is risky for any new or established network. Kinesis eliminates this risk with a fork from the Stellar network that utilizes the consensus method. This ensures that transactions remain fast, and cheap and don’t get clogged in the network. Kinesis promises lighting fast transactions anywhere in the world. This means two to three seconds, not hours or days which is the case with bitcoin at times of high network congestion. In addition, Coughlin also promises fees that are much lower than any competitor. He says the standard fee rate will be 0.45%, much lower than alternative cryptocurrencies or payment networks like Western Union which can be up to an insane 25%. Kinesis Decentralization The show’s host, Bart Chilton asks Coughlin an interesting question at a certain point in this interview. One that really touches on the message of both Kinesis and the entire crypto market in general. “What sorts of problems is Kinesis trying to address in the current financial system?” Coughlin goes on to describe the many problems with the banking system today that Kinesis will provide an alternative. Here are some of the key points that Coughlin touches on. “We address problems across different sectors, and one of those sectors is the banking sector. So I go put money in the bank, I’m actually giving the money to the bank by transferring title of my money to that bank and so I’m holding counterparty risk against that bank.” He goes on to describe the practice of bailouts for the bankers, where they have less risk or fear of being held accountable for running bad practices. Traditional banks act in the best interest of the bankers, not the users. Money in the bank is not money that you fully own or control. Kinesis and blockchain technology are changing that and putting you in full control of your funds. The Users are the Title Holders One of the most important key components of the Kinesis system is that the end user is the final title holder of all the gold and silver that users’ coins are backed by. Kinesis does not hold the users' funds. Each individual has full control over their coins in the Kinesis crypto wallets and the coin holders are the gold and silver owners. In other crypto exchanges, you are turning the ownership of your coins over to the exchange when you deposit. You are then holding essentially a warrant for your funds to be paid upon withdrawal. It is important for the users and for the Kinesis system that users have full control over funds always. This is in the true spirit of cryptocurrency and for many in the scene, it is a necessity. As Coughlin says, “this is an attribute that Kinesis is addressing, one hundred per cent.” Protection from Hacks Crypto exchanges get hacked because criminals know that is where many users keep their funds. With Kinesis, the users are in control of their funds. They are not sitting in an exchange where they have to wait for withdrawal delays. In addition, Kinesis is taking all measures to protect its users. The benefit of being blockchain-based is that all the transactions are there visible on the blockchain. It is a transparent system that anyone can see and review. Transparency is key and Kinesis provides that. You know where your funds are being held. What makes Kinesis unique While there have been a few gold-backed cryptocurrencies in the past, and there may be several more In the future, no one has approached this sector like Kinesis. In terms of what Kinesis offers, they are a much greater platform with numerous benefits to the user. Kinesis is a full monetary system with a primary and secondary market structure. Kinesis has mobile banking integration and even the Kinesis Commercial Center that ties in with merchants for ease of adoption. Kinesis has its own web wallets with rock solid support and a sleek simple design layout for new users. Older model crypto wallets are clunky and easy to misuse and send transactions to the wrong places. Kinesis even offers a debit card that will allow users to spend their Kinesis coins anywhere where major credit cards are accepted. Therefore even though crypto merchant adoption is still slow, you can still spend your KAU and KAG coins anywhere in the world. Kinesis has a full yield reward system that incentivizes users. They have two dedicated exchanges. One being an exchange for minting new crypto coins and the other being a full-service crypto exchange for digital asset transactions. No other blockchain or crypto project has a full fleshed-out system like Kinesis has crafted. They have thought intensely about the end user and have provided a unique experience that meets all of the users' needs in the cryptocurrency markets. Users benefit by spending money Kinesis is one of the only financial systems in the world that rewards the user for actually spending their money, as Coughlin puts it. Gold has traditionally been either an investment or a store of value for most of recent history. We are a long way away from the days of using gold for day-to-day transactions, food, services or whatever you need. Kinesis aims to bring gold back to being used as a day-to-day currency, through the use of the Kinesis coins. This is because Kinesis rewards users every time they choose to use the Kinesis coins, KAU and KAG. In a very astute and to-the-point example, Coughlin says “when presented with an option, okay I can spend my $20 US dollars now or I can spend $20 dollars worth of Kinesis coins, but I actually receive a benefit in perpetuity on Kinesis, I’m going to choose Kinesis.” That’s exactly the thought process consumers will have when they use the Kinesis system. As mentioned before, this is due to the yield system that rewards users with essential rebates for using their tokens instead of hoarding them like gold investors. The yield system grants benefits to the user when tokens are minted and used. There are numerous other benefits you are granted as a user just by participating in the network. With the Kinesis system, gold will return to a day-to-day medium of exchange through their KAG and KAU coins. Velocity tokens Coughlin then goes on to describe the other token on the Kinesis network. The Kinesis velocity token or KVT. This token is actually an ERC 20 utility token on the Kinesis platform. This token is currently in public sale, but is only available to licensed and accredited investors in the US, as Coughlin states. When you purchase and invest in these KVT tokens, you are investing into the strength and future of the Kinesis platform. This is because KVT holders actually receive a proportional 20 per cent share of all the transaction fees that are associated with ALL of the Kinesis currencies. On top of that, holders receive another 20 per cent of all commissions from the Kinesis Commercial Center. The benefits are very large for token investors. For those truly interested and believing in the Kinesis platform and it’s future, this is a chance to get a piece of the future growth and add it to their portfolio. Their Initial Token Offering for the KVT token is open until November 11th. Coughlin sums it up very well in the interview when asked about the KVT tokens. “So in the case of the Kinesis velocity token, whoever buys into these is buying into 20 per cent of the revenue of the entire monetary system. So as you can imagine, a monetary system is a business with pretty big bones and if we follow through with our vision then it’s going to be quite a large business. Ultimately we’re getting good traction.” So really, when you invest in the KVT tokens, you are getting a 20% share of the network and all the transaction fees of the entire system. This is quite an attractive offer for the right investor. The Kinesis Advantage Kinesis has an advantage over all other cryptocurrency startups, and that thing is legitimacy. Kinesis was born from the ABX or Allocated Bullion Exchange. Coughlin explains in this interview that ABX is “a full institutional exchange for spot precious metals, gold, silver and platinum, with an unblemished track record.” ABX was founded in 2011 and is very experienced already in the precious metals markets. So they are well equipped to advise and guide Kinesis through every asset of their business. ABX is also the world’s leading electronic institution. Technology is fused into their business, and they are very forward-thinking when it comes to the future of finance. Naturally, blockchain would be the next logical step and Kinesis makes the perfect partner. There is few startups in crypto today that have the same reputation or connections that Kinesis and ABX have. More on ABX, their exchange exists on a global scale, which represents seven major trading hubs for precious metals around the world. This is on four different continents and seven different countries. Being the first electronic exchange for physical bullion puts ABX in a market leader position and adds a lot of reputation and value to the Kinesis rollout. Few projects or startups in crypto today have the vision or the scope that Kinesis presents. While most startups aim to solve one task or problem, Kinesis has a multi-layered fleshed-out system that simultaneously solves numerous problems in finance and crypto while providing a service that everyone needs. For starters, Kinesis will solve the volatility problem that major cryptocurrencies of today are facing. This will pave the way not only for merchant adoption, but mass consumer adoption for day-to-day peer-to-peer commerce. This is what crypto was meant to be in its inception. Kinesis has more to offer than any other stablecoin competitor, simply overshadowing competing startups. Exchanges everywhere in crypto need a stablecoin they can rely on. One that is not backed by promises or other cryptocurrencies, but by real-world tangible assets. With the reputation that Kinesis has - and the fact that they are backed by precious metals -Kinesis will naturally be a favourite for exchange adoption everywhere. Kinesis offers true stability and most importantly, confidence in your investments. Kinesis offers more as a platform than any competitor. A debit card that is useable anywhere is yet another feature that crypto users have been begging for. Many users want to spend their cryptocurrencies but are unable to. This is a feature that is groundbreaking in itself before other Kinesis features are even touched upon. Kinesis is meeting all government requirements and legal obligations. This is something that puts them already ahead of competitors. Regulations in this cryptocurrency sector are rapidly growing, but legacy financial markets are no stranger to the needs. Again, Kinesis’ connections and experience in financial markets are putting them well ahead of new face crypto startups, many ran by young entrepreneurs without any experience. Kinesis Launch After the interview, Coughlin stayed in the US to have many meetings with investors. The Kinesis platform is gearing up for its launch. The KVT token is currently in public sale for accredited investors and that sale is coming to a close soon. The Kinesis platform is ready to meet the public and will very soon in 2019. The roadmap promises to launch their KAU and KAG currencies in early 2019 Kinesis has put together an excellent team as well. This includes the executive team that Coughlin is a part of, an Advisory board, an operations team, a development team and numerous partners. Few teams in crypto are as well put together. Kinesis has a big platform put together and a big vision to fulfil. While there may be many stablecoin competitors coming into the market now, few have the same to offer in any sense. Kinesis aims to be the best in the market today. Utilizing the history and reputation of gold and silver to back their Kinesis coins ensures the rock-solid stability that is needed in a stablecoin today. Coughlin has had several more interviews talking about the Kinesis platform. The message is growing rapidly and many are interested in this new platform. Kinesis aims to be a leader in the cryptocurrency market and surely will be. Many are already heralding Kinesis as a “Tether killer,” though these projects have many differences and are hard to compare. Most competitors are difficult to compare to actually. Kinesis has a lot to offer this crypto scene. It will be very interesting to see these developments happen, and see what place in the crypto universe Kinesis takes.

Zubair Bukhari
Zubair Bukhari

22/10/2018

Stablecoins: The Solution to the Volatility Problem

Cryptocurrencies like Bitcoin have come along with promising features and abilities. Although Bitcoin has shaken the world as a disruptive and game-changing technology, its volatility is a huge problem. One of the initial and most important intentions of Bitcoin was to be used as an everyday payment system. Simply put, it was intended to be a “peer to peer electronic cash system,” as titled in the Bitcoin white paper. So far, Bitcoin and other major cryptocurrencies have not been able to perform this initial important use case well. While there was initially some adoption from merchants, the adoption has been slow and due to technical issues, many merchants have dropped their support for Bitcoin and others. One reason merchants are unwilling to adopt crypto payments is the volatile price. In the current climate, one Bitcoin can be worth anywhere between $5800-$7000. To make up for crypto’s shortcomings, there is another class of cryptocurrencies that aim to solve the volatility issue that is ultimately holding Bitcoin and others back from being the everyday payment system they were designed for. This new breed of cryptocurrencies are appropriately titled “stablecoins.” Stablecoins bring the promise of solid price support that can be used as either a store of value, or an everyday means of exchange. It is for this reason that many are heralding stablecoins as having a far greater potential than Bitcoin. A stablecoin is a cryptocurrency that has stable price characteristics. Most stablecoins are pegged to the U.S. Dollar, while the upcoming Kinesis project will create coins that are backed by gold and silver bullion. The ultimate goal of stablecoins is to be an incredibly stable digital form of fiat-free cash, with the potential to solve the problem of cryptocurrency volatility. This provides traders and investors a safe haven during a market crash that can impact fiat currencies significantly. It also shields them from issues related to fiat currencies. Lack of support Due to strict regulations and banks becoming wary of cryptocurrencies, there are only a few exchanges that support fiat currencies. This makes it difficult to complete transactions using fiat-based cash. Slow transaction times It takes several days to send fiat to and from a bank account. Transfer between the ACH Bank and Coinbase wallet, for example, can take as many as 7 to 10 calendar days. Limited regulations As previously mentioned, regulations are now stricter when it comes to crypto-related transactions. This makes it difficult to purchase or pay for goods using fiat currency. When cryptocurrencies exploded in the mainstream market, their value increased exponentially, resulting in a flood of investment capital to Bitcoin and other cryptocurrencies. After the crypto mania phase, it wasn't long before more than 50% of the price of bitcoin decreased, along with the drop in media interest and its trading volume. This kind of cryptocurrency volatility can cause a large exodus of investors. It will also affect other cryptocurrencies that want to gain mass adoption status. It's hard to argue for the adoption of a currency in business if merchants can't rely on the daily value and fees associated with the currency. At the height of crypto mania in 2017, Bitcoin users were spending as much as 100$ or more for a single Bitcoin transaction due to the back log of transactions on the network. Transactions often took days to complete. This is unacceptable for business adoption. Stablecoins want to address this volatility by providing investors with a stable cryptocurrency. For it to work however, it has to satisfy the requirements of sound money. That is, it must be a store of value (SoV), a medium of exchange (MoE), a unit of account (UoA), and fungible. It must be easily moved and divisible as well. Store of value (SoV) This refers to a form of wealth which current value is maintained even to the future without any depreciation. Examples of solid stores of value are gold, silver, and other precious metals. Medium of exchange (MoE) For stablecoins to be a medium of exchange, it has to facilitate the sale of goods without using barter in the equation. Unit of account (UoA) A cryptocurrency must provide a unit of measurement that will allow its value to be defined and compared. For example, the cost of a car could be 10,000 units of a stablecoin. All cryptocurrencies can be used as a unit of account. The Stablecoin Solution Stablecoins matter because they are relatively stable in value, unlike Bitcoin and Ethereum. This is why it is often considered as a hedge against volatility, insulating you from the market volatility that is associated with cryptocurrencies like Bitcoin or Ethereum. If you trade 1 BTC for a stable coin, for example, its value will be the same even if the price of Bitcoin drops. You can also have stable coins converted back to BTC anytime. This makes stable coins ideal to use to invest in options, derivatives, and prediction markets. It is also a better currency of choice if you place a bet with a long and extended timeframe. Real Functionality How stablecoins work will depend on the type, whether its reserve-backed, algorithmic, or backed by other cryptocurrencies. The first type functions like paper money. Instead of being backed by gold reserves in a central bank, it is backed by one-for-one currency reserves that they are pegged to which in this case, are U.S. Dollars. A good example of this type of stablecoin is Tether (USDT). Even without any public proof, the 2.5 billion USDT coins that are in circulation are backed by dollars. Algorithmic stablecoins on the other hand, are controlled by an algorithm. There is software that controls the supply of the stable token, increasing and decreasing it to maintain its peg. Cryptocurrency-backed stablecoins, as the name suggests, use cryptocurrency as collateral instead of fiat money. Done on a blockchain, it removes third parties from the equation. The problem with this type of stablecoin, however, is that the cryptocurrency introduces a source of volatility that makes a stablecoin less stable than it is supposed to. As a solution, more collateral than a 1:1 basis is introduced into the transaction. For example, for a guaranteed $100 worth of a stablecoin, a larger amount of $150 worth of ether (Ethereum) must be deposited first. Stablecoins are commonly used as a liquidity tool for cryptocurrency exchanges. Many exchanges are wary of anything related to cryptocurrency because of its volatility, but stablecoins offer a solution to the problem. The Different Stablecoin Models Stablecoins are a new class of cryptocurrency that offer steady valuations and price stability. It is designed to retain its purchasing power with little to no impact from inflation. In order to maintain steady valuations, stablecoins are tied to price stable assets like gold or the U.S. dollar. Different methods are used to achieve price stability for different stablecoins. For now, there are three broad categories of stablecoins. But there are other stablecoin proposals at work and may be introduced sometime in the future. Fiat collateralized This type of stable coin uses a particular amount of a standard fiat currency as collateral. To issue crypto-coins, for example, U.S. dollars, gold, or oil can be used as collateral. A central entity is responsible for the collateral and will issue a token representing the money they hold. The ratio of the number of crypto-coins issued is also 1:1 against the fiat currency it is pegged to. This is why fiat collateralized is the most straightforward method of stablecoin creation and operation. Apart from a central entity or custodian that holds the collateral--fiat currency or commodity, this type of stablecoins require operational processes to ensure that valuations of collateral are maintained up to the mark. Processes include frequent audits and valuations. A popular example of a stablecoin using this type of architecture is Tether. On paper, it has a market cap of roughly $2.3 billion and with a daily volume that exceeds $1 billion. The token is hailed as the most stable cryptocurrency but is plagued with controversies from the lack of professional and publicly available audits. There is also TrueUSD, a flagship offering from TrustToken. It is a U.S. dollar-pegged stablecoin. It has a transparency mechanism designed to avoid issues that affected Tether. It currently has a public sale on CoinList. StableUSD, on the other hand, is another type of fiat collateralized stablecoin from Stably. It is backed by USD with every token fully backed and redeemable 1-to-1. It also offers support to multiple blockchains, including Stellar and Ethereum. Similar to TrueUSD, it aims to be verifiably transparent. Third party audits and real-time electronic bank data serve as verification of the cash reserves backing of each stableUSD. Fiat collateralized stablecoins however, have their share of problems. For this type of stablecoin to be successful, users have to trust the central entity that holds the money or collateral. In the case of Tether, trust is not exactly working out well. This is especially true with allegations about insolvency and accusations that this particular stablecoin is being used to drive up price of Bitcoin on exchanges. Crypto-collateralized Stablecoins Crypto-collateralized stablecoins depend on the cryptocurrency value that they use as collateral to maintain a stable target price against certain assets. Unlike fiat-collateralized stablecoins, which are simple but centralized, crypto-collateralized stablecoins are used in a much more decentralized approach, as they are backed by cryptocurrency reserves. In essence, these types of stablecoins work quite similar to their fiat counterparts. The only difference is, the collateral is not considered as assets in the real-world, but rather another cryptocurrency. They are extremely volatile. Thus, they are often over-collateralized (there is a huge rate of capital involved) to account for the price volatility of the underlying crypto collateral. Also, in the crypto-collateralized stablecoins system, a bulk of cryptocurrencies account for the price stability achieved by a particular stablecoin. While using these stablecoins is good for everyday situations, holding long term could be risky. There is still no account that this method has already been rigorously tested in real markets. One crypto-collateralized stablecoin is MakerDAO. Despite its increasing popularity, the implementation of such cryptocurrency has been perceived by users as complex and difficult to understand. Under the system, the user needs to deposit crypto assets into a smart contract, then receives a certain number of stablecoins. As previously implied regarding the use of these stablecoins, the cumulative price of the stablecoins he receives is lesser than the value of the crypto assets he deposited. One more major issue with using crypto-collateralized stablecoins is that if your crypto assets go through significant value depreciation, the loans you have taken out will be automatically liquidated. Non-collateralized stablecoins Unlike crypto-collateralized stablecoins, non-collateralized stablecoins are cryptocurrencies with stable prices and are not backed by collateral. Their implementation involves a system or an algorithm that contracts and expands the coin supply depending on the coin value. Basically, the non-collateralized stablecoin approach is based on the Quantity Theory of Money, which implies that “there is a direct relationship between the quantity of money in an economy and the level of prices of goods and services sold.” This means that the coin supply will depend directly on the prices of the stablecoins. For example, if a coin’s value is above $1.00, the supply would increase. On the other hand, if the value drops to less than $1.00, the supply would decrease. These activities create upward and downward pressure on the coins’ value, as needed. To understand more about this, let us take a look at some popular examples of non-collateralized stablecoins. Basecoin – Launched in October 2017, this stablecoin is backed by some of the biggest names in the industry, such as Metastable Capital and Andreessen Horowitz. A re-brand of Basecoin, called Basis, applies a 3-token system using Basecoin, Base Bonds, and Base Shares to implement a system that is similar to an algorithmic central bank. When the supply decreases, bonds are offered at a subsidized rate to pay for the principal and interest in the future. When the demand increases, the supply would also increase. Thus, new coins will be created.Base Shares – Simply known as “shares” in the cryptocurrency market, these tokens come on a fixed supply at the blockchain. These coins are not pegged to anything, with values stemming from their corresponding dividend policies. When demand for such coins goes up and more coins are created, shareholders would also receive newly-created coins as long as all outstanding bonds are redeemed.Carbon – This stablecoin is built on the Hashgraph platform and is compatible with smart contracts, making it highly feasible for use in financial applications. Specifically, it is considered to be used for the decentralized applications (dApps) landscape and for the Ethereum-based games, where a smart contract compatible stablecoin would be a good catalyst.Saga - Saga is a non-anonymous stable cryptocurrency that is backed by a solid set of advisors, such as JP Morgan Chase chairman Jacob A. Frenkel, (chairman of), Cornell professor and IC3 director Emin Gün Sirer, and PHP developer Zeev Suraski. This stablecoin is quite unique from its counterparts, as it is backed by reserves and uses a variable fractional reserve, which is essentially a reserve of conventional currencies. Its supply depends on the size of the Saga economy.Reserve - Founded by Nevin Freeman, this stablecoin originated as an investment round from Coinbase. How it will be implemented is yet to be seen. Overall, stablecoins are likely to evolve over the years. The market around these coins would become more and more competitive, with gradually rising interest in cryptocurrency. The Issues With Current Stablecoin Leaders What is the most stable cryptocurrency? A better question would be what is the best stable cryptocurrency? Because there are several options. None of them are perfect, however. Stablecoins are gaining popularity over other types of digital currencies because of protection from volatility. With links to real-world assets like U.S. dollars, precious metals like gold and silver, and oil, a stablecoin gives traders mental peace, an option for easily liquidated currencies, and eases up concerns on instability. Like most things, stablecoins have their problems as well. In fact, even the best stablecoins have certain disadvantages. Tether According to its website, Tether USDT is “100% backed by USD” with a conversion rate of $1 per 1 Tether. This offers some stability in a crypto space filled with other volatile currencies. But there are reasons for concerns. Not Decentralized Although it uses blockchain technology, the fact that it is run by humans, who are potentially capable of making mistakes, make Tether less reliable. Many believe that Tether is being issued by the same people that run the Bitfinex exchange, another leading exchange that accepts USDT as collateral for trading. This led to the assumption that the 1:1 ratio is not absolute and there might be some fractional reserve lending that is happening behind the scenes. Shady claims Many fear that Tether Limited does not hold enough U.S. dollars to back the stablecoins that are in circulation. In January alone, there were 850 million new digital tokens that Tether released. While this looks good in the sense that there is more capital flowing into crypto, critics say that the cryptocurrency market might be manipulated. This is because the increasing number of tokens released coincided with the record high prices of crypto. Poses a systemic risk With the trading volume of Tether regularly exceeding its market cap, the investment research firm Weiss Ratings thinks of it as a threat to the ecosystem. This is because Tether is one of the main sources of liquidity. As the Weiss report goes, “What happens if Tether does turn out to be shaky? ... What if this large source of liquidity suddenly evaporates?” True USD This is one of the best ERC20 stablecoins on the crypto market as it is pegged with the U.S. Dollars. This can be likened to the Tether USDT, except that it is fully fiat-collateralized, verified transparently by fiat-collateralized like TrustToken, and is legally protected. The people who manage the token are previous employees of Google, UC Berkeley, and PwC. But TrueUSD might not be as stable as it’s supposed to be. In fact, its price showed some volatility, following the announcement that the token will be listed on Binance. Its price had a sudden rise at an unprecedented 40%. It eventually subsided but it did reach $1.39 per token. This led to fears that the price return will dip below $1. But just like in March when TUSD was listed on Bittrex, traders were advised not to pay more than $1.05 per token to avoid losing money. Are the bots really to blame for the price bump? According to Rafael Cosman, co-founder and CTO of TrustToken, bots that are always listening for announcements of new listings tend to “buy any coin as soon as it is listed on a new exchange” to make more profit. But he is confident that anyone who knows that the token is redeemable for $1.00 will not pay for more as they stand to lose money. People are also anticipating on how the token will fare following an audit of its financial situation. Because the token is backed by U.S. dollars, many are wondering if it has enough to back the stablecoins in circulation. Tether for instance, has failed to present a proper audit test. At this stage, stablecoins can be considered highly experimental. So, expect some highs and lows even from the best stablecoins on the market. Investors however, don’t let these concerns stop them from trading, especially in the short-term. The fact that both Tether and TrueUSD are secured against the U.S. dollars and not subject to the level of speculations that other cryptocurrencies have brings the attention of investors. Just stay aware of what’s going on with these tokens on the market before you trade. Keep an eye out for the sudden bumps and drops and don’t pay more than what you’re supposed to for each token. White standard This stablecoin is currently the only one on the Stellar Blockchain, which is known mostly for its fast transaction times. Launched in August 2018 by The White Company and Fintech with the aim of creating a seamless foreign currency monetary system for users. During the official press release, CEO of The White Company, Elizabeth White, said, “Our goal is to unleash crypto’s real-world potential, and this partnership with Interstellar is the first of many steps in not just bringing the White Standard stablecoins to the masses, while increasing the ease for consumers to purchase Stellar lumens (XLM) with USD, GPB and the Euro.” White standard offers three variants of coins, tied to the US Dollars, UK Pounds or Euros. Once all the kinks are worked out, it is touted as allowing seamless deposits, withdrawals, and transfers in all three currencies. The White Company partners with Interstellar, an integrated decentralized exchange (DEX) platform and cryptocurrency wallet powered by the Stellar protocol. Currently, they offer users access to five major cryptocurrencies: Bitcoin, Stellar Lumens, Litecoin, Ripple, and Ethereum. This partnership will integrate the White Standard stablecoins so that Interstellar will be able to allow users to instantly withdraw, deposit, or transfer through the White Standard stablecoins. It may seem like WS stablecoins are quite similar to Tether. The only difference is that the latter does not offer current audited information. However, the White Standard is backed by the USD for the same reason the USD was backed by gold. Because it’s currently the worldwide medium of exchange it becomes easily traceable into any good or service. While there are concerns about inflationary pressures on USD, they have not yet been realized and are likely far off for now. Anatomy of Kinesis: the Ultimate Stablecoin What makes the Kinesis system an evolutionary step toward a better monetary system is that it acts as a store of value and a medium of exchange both at the same time. The Kinesis currencies will soon be launched in November 2018 and will have two currency systems: KAU and KAG. These will be minted into existence and will represent precious metals, which are the bases for the cryptocurrency 1:1. This means that 1g gold is equivalent to 1 KAU and 10g silver is to 1 KAG. These will be stored and insured in third-party vaults that will be audited twice every year. the Kinesis Standard Amazingly, the Kinesis system is designed to actually work. It’s not just any metal in a vault. The workings of the Kinesis system include: Kinesis Currency Exchange (KCX) – where the coins will be produced.Kinesis Blockchain Network (KBN) – where the coins will be utilized.Kinesis Blockchain Exchange (KBE) – where coins are traded.Kinesis Digital Bank (KDB) – where transactions are held.Kinesis Commercial Centre (KCC) – where various companies are able to offer goods and services. Different users will have the option to choose any form of exchange they want for gold, silver, and other major currencies, like the euro, dollar, pounds, franc, and yen. All of these will be integrated with the rest of the world using conventional channels. These include debit and credit cards on the MasterCard and Visa networks, as well as ATM networks, telegraphic transfers, Western Union, PayPal, MoneyGram, and more. Kinesis Solves the Issues of Other Stablecoins What makes Kinesis unique is that it offers price stability, which isn’t available in other stablecoins. This currency system does this by basing its currencies to physical precious metals, like gold, which has a strong store of value for the longest time. Thanks to the minds behind it, they have gone through the list of everything that could possibly go wrong with every coin and have provided solutions to each one of them. Kinesis also has a rewarding multi-faceted system that is unlike any other. It is also hedge-free because it offers assurance on price stability, as well as trading to a wider variety of assets. This is made possible by having strong partnerships with the world’s leading electronic institutional exchange for physical precious metals, like gold and silver, ABX (Allocated Bullion Exchange), as well as Deutsche Borse Group and European Commodity Clearing. Unlike Tether, wherein its tokens are backed by the US dollar yet are at high risk of fractional bank reserves, Kinesis transactions are conducted through bullion exchange networks. Aside from that, its users are rewarded through its velocity-based system, wherein rewards are based on frequency and rate at which they are carried out. In essence, Kinesis can be considered a trustworthy stabilizing force that drives up velocity further in the cryptocurrency world. In a way, it will offer a more suitable replacement for the highly controversial Tether token. Furthermore, there is a better incentive to trade capital. the Kinesis Launch The Kinesis system has a multi-faceted yield system that is unlike any other. It provides incentives to users’ participation by attaching it to different types of yield. This means that anyone who participates in the Kinesis system receives money for every transaction, as well as for the overall rate of money-changing hands. In other words, the system provides a great reward for using such currencies. This means that this stablecoin addresses an important issue that fiat monetary systems have: the need to inflate prices and devalue the currency to stimulate activity in the monetary system. Enjoyed reading our guide? Check out more crypto-related articles!

Zubair Bukhari
Zubair Bukhari

05/10/2018

The monetary system for a successful and sustainable future

In the same way, our sun unconditionally delivers an indiscriminate share of energy to planet Earth that stimulates life, we present a comparative energy system to stimulate the movement of money, assets and hence overall commerce and economic activity in a fair, honest and rewarding process. It is an entirely new monetary system, which is based on movement, kinetics and velocity. We name the system Kinesis. The Kinesis system is an evolutionary step beyond any monetary system available in the world today. It enhances money as both a store of value and a medium of exchange and has been developed for the benefit of all. Core to the mechanics of the system is the perpetual incentive and thus stimulus for money velocity. Outside capital is attracted into Kinesis via a highly attractive risk/return ratio and then put into highly stimulated movement, promoting commerce and economic activity. This is achieved through structuring money to represent 100% allocated title of an asset and then attaching a unique multifaceted yield system that fairly shares the wealth generated by the system according to participation and money velocity. Aside from offering the greatest store of value and striving to provide the most efficient medium of exchange, Kinesis is a monetary system focused on: minimising risk; maximising return; stimulating velocity and maximising the rate of adoption. Kinesis defeats Gresham’s Law of Money that asserts “bad money drives out good”, by highly incentivising “good money” to circulate and be utilised as an effective medium of exchange. Someone who values money over other money is inclined to hoard it and not use it as a payment currency, but rather use the less valued currency for payments. This model has been broken in the Kinesis system as the reward for using the valued currency is so tremendously strong. The primary currency chosen for the Kinesis monetary system is a kinetically charged physical gold-based currency. Gold being the greatest store of value, indestructible in every sense, physically rare in quantity and has been appreciated by human civilisation as money for longer than anything else. It is the money created by our universe and not by people. It is created by a rare cosmic event of two neutron stars colliding, so rare that the first time this event was witnessed by humankind was 17 August 2017. Hold gold in your hands and you can feel its energy. It is the colour of stars, it is the money of the universe. Gold is the undisputed champion of fair, honest and sustainable money. Put allocated gold on a kinetically charged decentralised rail system and you have a very special monetary system. We believe this is what we have achieved, and a lot more. The Kinesis system can be overlaid on top of anything that can be standardised, traded and stored as value. Accordingly, we are developing a kinetically charged digital currency suite with allocated title of bullion, fiat bank notes, cryptocurrencies and other assets that are physically and digitally securely stored in our allocated Kinesis banking and asset management system. By attaching a yield to digital currencies, risk/return ratios can be forecasted and virtually all currency and investment asset markets can be targeted and infiltrated. As such, over time we plan for more currencies and assets to be added, ultimately infiltrating more markets spread across the world. Kinesis will attract capital from: Cryptocurrency markets - Currently little to no yield The gold and silver markets — Currently little to no yield Fiat currency markets — Low to negative yield via debt-based interest rates Investment asset markets — Comparatively low yields for the market and property investments Ultimately, if someone can get the same asset at the same price, but with significantly lower risk and higher return, it makes little sense for them to not choose the asset with the better risk/return ratio, particularly when significant returns are on offer. As the Kinesis monetary system is one that allocates title directly to the ultimate beneficial owner, where banks conversely hold legal title of their customer deposits and put those deposits at risk, the Kinesis system is in fact much less risky and with much greater return than legacy alternatives. With global low to negative interest rates, bail-in provisions, depositors’ insurance being removed, and with banks holding legal title to their customer deposits, it makes no logical investment sense to choose risk and nil-to-negative return over the alternative Kinesis system with negligible risk and high return. In comparison to legacy fiat money and fractional banking systems, Kinesis seems too good to be true, but it isn’t. Once clearly understood, Kinesis will lead a highly disruptive paradigm shift in money. Kinesis has taken the very best properties of both old-world money and new-world innovation and combined them together to power banking and commerce in a new fair, inclusive and incentivised way. The result is something extraordinarily powerful that will change the way we all view money forever. The primary elements of Kinesis are: Gold & Silver — The primary currencies offering allocated 1:1 title to physical gold & silver — the greatest stable and definable stores of value for use in commercial and private transactions and investment. Yield — A perpetually recurring yield generated from economic activity, not from debt based interest like fiat currency — providing definable value via Net Present Value (NPV) calculations for use in commercial, institutional and retail investment. Cryptocurrency technology — Can only be enhanced. Blockchain peer-to-peer decentralised distributed ledger technology — Blockchain may become obsolete, but distributed ledger technology can only be enhanced. Kinesis can never be destroyed as these elements will never go away, never be valueless and can only be enhanced. Nothing can take away intrinsic asset value and the value of future cash flows, and technology will only ever be enhanced. Gold and silver have survived the greatest test of all, time, and so too will Kinesis. Other cryptocurrencies with value determined by the anonymous decentralised blockchain payment capabilities and their controlled supply scarcity are all at risk of losing value as their initial founding value proposition is diluted by others coming into the market with enhanced solutions. This is evidenced by Bitcoins’ dominance continuing to fall and has been witnessed in many other industries and markets throughout history as competitors rise. A major contributing factor to the volatility in cryptocurrencies is that they are impossible to value. By intrinsically backing a currency, hence back-stopping the value and defining the risk, and then placing a yield on it, hence defining the return and providing superior value, then a currency which is safe, stable and rewarding is created with a highly attractive investment risk/return ratio attached. This form of currency has necessary real-world application in both commerce and private transactions, along with attracting capital from institutional and retail investors and savers. This is not just a currency, this is a new parallel monetary system to sit alongside but integrated into the legacy problematic centrally controlled fiat and fractional monetary and banking systems. Kinesis is the undeniable superior alternative. This model is highly revolutionary alone, however, to take it the next step further, already in place is a highly disruptive retail and institutional commercialisation strategy with unique distribution and committed adoption from day one of launch. Pre-existing investment commitments are in place for the Kinesis currency suite which will surpass the largest ICO to date by a significant multitude. Kinesis is being developed and being brought to launch by a consortium of industry leading organisations in the precious metal trading, mining, refining, exchange, technology, blockchain, mobile banking, vaulting, postal system and marketing spheres. From launch the system will have extensive institutional and retail distribution, integration, liquidity and adoption. Our liquidity, which will be provided by professional bullion market participants and others, will enable billions of dollars of value to efficiently enter and exit the market. Direct and indirect integrations will provide for immediate adoption into hundreds of millions of users. With the evolution of blockchain, cryptocurrencies and mobile devices, the people of the world have been presented with a profound opportunity. It’s an opportunity to apply empowering creativity to money and be part of a person-centric revolution. We have now been enabled to adopt and support a system that individually and collectively benefits us all based upon nothing more than participation. This system combines new world decentralised technology with the oldest, fairest and most sustainable form of money, to empower and serve the interests of us all equally and capitalistically. Welcome to Kinesis, the equally all empowering monetary system of the future.

Zubair Bukhari
Zubair Bukhari

30/03/2018