Blockchain And Gold Like Peanut Butter And Chocolate?

Authored by Mike Shedlock via,

Even before the emergence of the growing plethora of cryptocurrencies, several attempts had been made in the past to create digital currencies based on gold, but none of them gained widespread support. Will blockchain and Bitcoin succeed where other attempts failed?

One of the common criticisms and challenges of bitcoin and other cryptocurrencies is their price volatility which renders their consideration as a store of value nearly impossible. Some believe that gold backed cryptocurrencies may hold the key to solve these key challenges.

There are already several cryptocurrencies, otherwise known as altcoins, backed by gold that have been launched. Several of the leading online bullion exchanges have implemented or are also implementing blockchain to create more efficient mechanisms for managing transactions. Each month it seems like there are more and more players joining the fray.

My friends at The Hutch Report have provided me with an analysis of this nascent gold backed cryptocurrency niche along with a review of some the various players in the space. There are already some obvious differences across platforms which will most likely serve to weed out the serious players from those looking to make a quick buck.

This analysis provides an objective review of the strengths, weaknesses, opportunities, and threats as well as a look at 23 gold-backed crypto and digital currencies. A review of some of the exchanges is also thrown in for good measure.

Those Interested in more detail you can download the full report on Gold Backed Cryptocurrency. If you are looking for either a "To the moon, Alice" kind of report, or "This bubble will crash" kind of report, you are likely to be disappointed. Rather, this report analyses the increasing number of cryptocurrencies being backed by gold bullion. Included are research and analysis on 23 different companies and 4 gold exchanges using the blockchain. Here is their conclusion.

Hutch View

The recent economic and financial crisis of 2007-2008, not to mention the savings and loan crisis years before, woke people up to the fact that their banking and savings accounts may not be as secure as they once thought. In addition, people have begun to realize that the purchasing power of their fiat currency savings have been eroding over time as working families are fmding it harder and harder to get through the month.

Massive central bank intervention into our free markets has not only caused more worry about potential runaway inflation, which would cause fiat currencies to be devalued and further losses of purchasing power, but their actions have caused an ever increasing wealth gap between the rich and the poor. It is clear that fiat money has serious economic and ethical drawbacks. This has prompted a search for a better alternative.

The marriage of cryptocurrencies and gold enables alternative choices to holding more than fiat currency. Although we can't imagine fiat currencies to be replaced overnight, the promises of gold backed cryptos do look compelling moving into the future and they are certainly important to follow.

In spite of the strengths of a gold backed cryptocurrency there are still many unknowns. In their short history we already have some that have come and gone. Our research into many of the up and coming gold backed cryptocurrencies has shown that the information available is not completely clear or transparent and sometimes sketchy at best. Previous examples of blatant fraud is also a reason to be defensive but not dismissive of the newcomers. We also have a variety from different parts of the globe. There is not enough of a track record with which to have the confidence to make a significant investment although it is worthwhile to look at them from a short term trading aspect in order to see how well they function and if they are able to deliver on their promises.

The principle strengths of the gold exchanges based on the blockchain is that they are being developed by reputable organizations. We don't lose site of the fact that these blockchains being used are centralized which means they don't incorporate many of the advantages of the decentralized model for which cryptocurrencies such as Bitcoin have become known. They are not yet fully operational therefore it is difficult to judge their efficiencies.

Although these new gold backed cryptocurrency and blockchain gold exchanges provide a compelling alternative to the purchase of gold we would not be jumping in just yet, however the future looks very exciting and by understanding the current developments in the sector through this report you are provided with a greater advantage as they mature.

The ventures with the strongest management teams look to be the most compelling. For this reason the exchanges; Bankchain Precious Metals, Goldmoney, The Royal Mint and Tradewind, look solid. Among the gold backed cryptocurrencies, we will be following the launch of BullionCoin.

Mish View

If you want to hold gold, hold gold. But if you are still itching to get into cryptocurrencies despite (or because of) the massive crypto-rally, then gold backed crypto may be the way to go.



VWAndy Sat, 10/28/2017 - 20:14 Permalink

 Id like to see and energy backed chit. Exchangable for say a gallon of gas or a pint of high quality booze. This measuring shit with rubber bands sucks for me. An its on you to find a way to pay me bitches.

Bokkenrijder DeathingerStar Sun, 10/29/2017 - 06:10 Permalink

Oh wait, lemme guess: and in a few years time the gold backing will get ditched like they did with today’s currency system and then the government takes control of the blockchain technology?A gold backing will perhaps only be the primer to help kickstart this new cashless age when the old system crashes. A gold backing in order to give crypto some desperately needed credibility, something which will at a later stage be removed when it becomes an annoyance for The Establishment.‘Butcoin’ by itself, with or without ‘cockchain,’ is just fiat on steroids. It’s nothing intrinsic, no matter how many barrels of oil it takes to ‘mine’ one. Ask yourself: “how many barrels of oil does it take to print one pallet of physical fiat dollar notes?” (Cutting down trees for paper, turning it into paper, making special ink, powering printing presses, transport, etc etc)

In reply to by DeathingerStar

J S Bach VWAndy Sat, 10/28/2017 - 20:31 Permalink

The only way you can "base" a currency on gold is by POSSESSING gold.  You can't build it upon paper contracts and promises to pay.  Using this false strategy, it will ALWAYS fall apart.  This is why Russia and China are quietly (and wisely) amassing tons of physical gold reserves.  When the gullible goy host called the United States finally ends its usefulness to the parasitic (((usurers))), the fact of gold's importance will be made apparent to them (too late, of course).

In reply to by VWAndy

HRClinton J S Bach Sat, 10/28/2017 - 20:40 Permalink

If you think outside of the Bullion-stacker mind-box, you too will realize that it's not an Either/Or proposition.Played correctly, it becomes an AND proposition, where you get the best strengths of both Gold + Crypto:   1. Use Gold & Platinum to back the Currency   2. Issue PM-backed Currency as Crypto-Currency:  Decentralized Ledger on www, rather than a Ledger held by the CB.That way, you and your Crypto can freely move across borders, w/o fear of uniformed thugs robbing or you.  And it's not like you'd "declare" crypto at Customs, ha, ha.

In reply to by J S Bach

StillSilence HRClinton Sat, 10/28/2017 - 20:45 Permalink

It's a lovely idea as long is it remains completely honest & accountable, so essentially (easily) redeemable by any and all users at any given time.If it could somehow be kept in perfect harmony with actual production/existence of a real commodity (which Im not saying isnt possible), it would seem to merge honest real world money with digital convenience in a way that could actually be stable over the long haul.

In reply to by HRClinton

OverTheHedge StillSilence Sun, 10/29/2017 - 01:32 Permalink

If we are looking for the mythical perfect currency, I still think trading in energy is the solution: we all need and use it, all of the time, various fules can be easily priced based on their output, it is, by definition non-inflationary, and would immediately cripple the current system. Never going to happen 

In reply to by StillSilence

tmosley libertyanyday Sun, 10/29/2017 - 10:18 Permalink

Ridiculous scenario.Anyone can start a new crypto. Takes five minutes. Even if they were able to wave their magic wand and destroy them all in an instant, there would be a fork immediately with privacy and decentralization focused features that preserved people's purchasing power (as the blockchain would still exist).It's basically like claiming that the CBs will destroy gold and introduce their own new metal currency. 

In reply to by libertyanyday

Anteater J S Bach Sat, 10/28/2017 - 22:18 Permalink

Russian and China are gold producers. There aren't 'quietly' buying up anything, they're openly buying surplus bullion coming out of the mines to keep the price above $1,000. Otherwise it would drop to cosr of production and smelting, about $375, or $750 at retail.There's currently a 35% bullion premium to some unknown precious middleman, and another 35% premium on top of that for coins selling at $1350.

In reply to by J S Bach

Thoth777 Anteater Sun, 10/29/2017 - 05:57 Permalink

The only reason gold isn't going up like Bitcoin is that they are selling naked shorts into the market constantly. But they have not understood until just recently that Bitcoin is far more dangerous to the Banksters than gold. You can't confiscate a Bitcoin, or short it in some rigged futures market. You can't identify who owns them, or how they are being used. You can't stop it because it's a decentralized computer program that neither knows nor cares about the law. And there are decentralized exchanges that require no personal information. And lastly but most importantly, you can't even prove anyone ever used one if they don't voluntarily give you that information. This is an extinction level event for all traditional banks of every type.

In reply to by Anteater

BallAndChained VWAndy Sun, 10/29/2017 - 03:32 Permalink

No wonder they called the new forked up Bitcon "Bitcon Gold". They wanted to get ahead of the curve of the real gold backed cryptos by calling their Blockchained NOTHINGNESS Gold to con as many people as they can. The ignorant dummies the con artists are targetting will believe there is real gold in their Blockchained NOTHINGNESS.

In reply to by VWAndy

tmosley BidnessMan Sun, 10/29/2017 - 09:52 Permalink

How large is your mining network?If it's less than the top ten minable currencies, your crypto is worth jack shit, absent ingenius new technologies. And then you'd better be a damn good salesman AND your shit had better work AND it had better be secure.Peanutz just don't understand how cut throat this world is, nor the resilience and security that that type of environment fosters.

In reply to by BidnessMan

VWAndy Sat, 10/28/2017 - 20:25 Permalink

 The way I see it with the pint of booze you can get liad even if the power goes out. Thats kind of a deal breaker for fanta coins. There is enough cockblocking already. With a booze based deal its not going to really ever be a problem.

tion VWAndy Sat, 10/28/2017 - 20:49 Permalink

I wonder how much firewood I could have split per pint of fine booze even with the lights still on.  If only... Someone wake me up when the blockchain linked global gold atms go live.  In the meantime, I may need to refashion some of my chocolate and pb into some buckeyes, yum.

In reply to by VWAndy

1.21 jigawatts Sat, 10/28/2017 - 20:33 Permalink

Gold's price won't do shitas long as kikery controls ETF issuance. Duh.Hell, any crapcoin will net you gains better than Jew gold.If you like shiny stuff, buy shiny stuff.