Posted 17th julio 2023

Gold in Technology: Merging Metals with Blockchain

merging gold blockchain technology

Gold has held its value since ancient times. Many writings from historical civilizations have mentioned gold and its valuable attributes. But what about the value of gold in technology today? 

Why Does Gold Hold Its Value?

Before looking at how gold and technology are combined in today’s financial market, it’s important to have an understanding of why the metal itself is considered so valuable.

It’s a physical asset

Gold is, of course, a physical metal. Unlike fiat currencies, gold cannot be simply printed and duplicated whenever governments decide they want more of it. 

This means physical metals aren’t subject to government manipulation or inflation. So, they can provide investors with security and stability.

It drives industry

Gold mining, like all mining, is an expensive and time-inefficient process. That said, gold mining also creates value for the local communities where the industry is present. This includes increased employment and tax revenues alongside improved infrastructure and access to healthcare and education.

It has stability

Physical metals, by the fact that they’re a tangible, finite asset help to hedge against inflation risks. This means gold retains its value during economic upheaval and is easy to sell when needed.

However, gold is not an effective currency to use for daily exchanges. Storing or moving gold is an expensive process. This has led investors to look for alternatives to holding actual physical gold.

It’s (now) more accessible

Since the advent of gold technology, investing in the precious metal has become more accessible. For example, Gold Exchange Traded Funds (EFTs) have long been an option for investors. Although, despite being an easier way to gold to your portfolio, they do not come without their risks and considerations. First and foremost, the fact the investors do not necessarily own the underlying physical asset and therefore, cannot redeem them in the case that they ever wished to.

Until the arrival of blockchain technology, there were no other methods of using gold as a day-to-day currency for transactions. 

Bringing Gold Onto the Blockchain

Fortunately, gold is now being brought onto the blockchain. By backing digital currencies with gold, Kinesis presents investors with a much less volatile investment opportunity.

Gold-backed crypto offers a strong advantage over fiat-backed crypto: stability and security. This is because gold’s value stays stable over time. Therefore, the value of gold-backed crypto cannot fall below the value of gold. By extension, gold-backed crypto makes for stable investment opportunities.

Volatility in cryptocurrencies

Meanwhile, Fiat currencies are going through rapid deflation worldwide, with Venezuela bolivars and Turkish lira being prime examples of the catastrophes that can transpire. 

In 2022, Venezuela’s national currency lost 31.2% of its value in 30 days. Meanwhile, the Turkish lira has declined by over 80% over the past five years. Any stablecoins backed by fiat currency are subject to deflation over time for this same reason.

By extension, cryptocurrency stablecoins have also experienced rapid deflation. Take Tether as an example. 

Tether is backed by USD, a waning currency that has continued to decline in late 2022 and early 2023. This aside, Tether has numerous controversies regarding their lack of professional and publicly available audits. 

This has not been comforting for Tether holders. Especially considering Tether is supposed to be pegged to one dollar, but has its own share of volatility, and has failed to hold that dollar peg. 

Deflating fiat currencies aside, lack of knowledge around the value of cryptocurrencies is also affecting its volatility. Many people don’t understand the true value of these cryptocurrencies, perhaps even believing this value to be zero. Cryptocurrencies are valued according to the confidence that investors and development teams have in them. 

In this sense, cryptocurrencies today are very similar to legacy fiat currencies like the USD or Euro. The belief in fiat currencies backing, and the trust of the government is what keep them going. This is also how countries like the United States ends up with over 20 trillion dollars worth of debt.

Gold blockchain opens up new possibilities

Gold blockchain opens up many new possibilities that were not present before. Benefits of transacting with gold technology include:

  • An anonymous process for investors. Utilizing the gold blockchain, anyone can send payments and transact with Kinesis digital currencies, completely anonymously. 
  • Protected liberties and identity. This protection is essential in an age where your information seems to easy to fall into the wrong hands. With traditional banking systems, the method of exchanging account information to send and receive payments has led to numerous identity theft issues. 
  • A safe and secure way investment opportunity. Given gold’s long-standing reputation as a store of value and a hedge against inflation, many investors trust gold over experimental technology. While technological advances see the value of cryptocurrencies rise and dip with little notice, gold stays constant. 

Given the pace of change in technology, we never know whether there is a “better” crypto alternative around the corner. Therefore, cryptocurrencies like Bitcoin are risky propositions, and they run the risk of one day becoming outdated, redundant technologies.

That’s not to say there aren’t benefits to investing in cryptocurrencies. But backing cryptocurrencies with gold is an effective way to minimize the risks associated with investing in cryptocurrencies. With gold, investors can build confidence in their digital assets.

Kinesis and the Gold Blockchain

Through gold blockchain, Kinesis is incentivizing the growth of a stablecoin network. By taking precious metals and putting them on a high-speed rail system, the blockchain, several investment possibilities open up. 

The Kinesis platform has numerous ties to the gold and precious metals industry. Kinesis is partnered with the Allocated Bullion Exchange (ABX), a leader in the gold and precious metals industry. 

They have numerous exchanges in several different countries and are a global platform for the sale and exchange of gold bullion. 

This partnership means Kinesis can all gold and silver backing of KAU and KAG are fully allocated and fully insured. One gram of gold for every KAU and one ounce of silver for every KAG coin. 

As a result, Kinesis cryptocurrencies combine the reputability of a trusted precious metals trader with the accessibility of a blockchain platform. Creating a unique opportunity for investors looking to step into digital investments.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.