Blockchain Digital Currency Backed By Gold
The pace towards a new monetary system appears to be accelerating. As to its form, gold will almost surely be at its center, as the linchpin of a basket of digital currencies linked via blockchain. Recently the World Gold Council, the trade group for all things gold, suggested that gold trading be removed from London and New York and replaced with a blockchain tracking every gold transaction among countries and, probably, individuals within countries. My strong guess is that the two blockchains will be intertwined.
None of this surprises me, as you’ll know if you’ve read China’s Rise and the New Age of Gold. However, what does surprise me is how ferociously this transition to a new monetary system – which is essential to an orderly world – is being resisted by the U.S.
World Gold Council
The following is cited from the World Gold Council website, which specifies that the aim is to expand the trusted, closed-loop ecosystem which currently exists…
- Integrity
- Accessibility
- Fungibility
The world is going through a transformation in terms of expectations for how businesses and entire industries should operate. Today’s investors and consumers demand transparency and integrity. They want to know products have been responsibly sourced and produced. The gold market is no exception and is impacted by these changes.
Gold247 is the World Gold Council’s vision for transforming the global gold market to meet the challenges of today’s consumers and investors. The way gold is currently traded and the way the supply chain is managed, needs to evolve to ensure the gold market continues to meet the expectations of end-users, the financial services community, and regulators.
Gold247 transformation is focused on three pillars of work: integrity, accessibility and fungibility. These three pillars are underpinned by the digitalisation of gold and the digital transformation of the gold market’s infrastructure. This initiative aims to enhance trust in gold, and as a consequence, unlock substantial demand.
Integrity:
The essential foundation for gold market reform is supply chain integrity. That is why the World Gold Council has partnered with the LBMA to develop and implement an international system of gold bar integrity. Using distributed ledger (blockchain) technology, the aim is to expand the trusted, closed-loop ecosystem which currently exists for the 400 oz.gold bar market to also incorporate smaller bars, including kilo bars. Over time, this will help consumers, investors and market participants to have further confidence that their gold is authentic and has been responsibly produced and sourced.
Accessibility:
In order to remain relevant, the gold market must undergo a digital transformation, allowing transparent and effortless 24/7 retail and wholesale transactions. This means removing artificial barriers to participation and establishing modern market infrastructure. The digitalisation and tokenization of the market is essential to modernise the gold market and make it more accessible to investors now and in the future.
Fungibility:
The current structure of the global market is fragmented and prevents gold from being an easily tradable financial asset. In order for gold to be fully fungible, the industry must work together to establish a global standard to which all participants can adhere. An agnostic, freely exchangeable token representing this standard will defragment the market. Tokenization increases transparency and ease of access which will in turn, promote demand.
The World Gold Council is a Partner Member of the Financial Markets Standards Board (FMSB) and our CEO, David Tait, chairs the Precious Metals Working Group. In this forum, market practitioners from across the FMSB membership and key stakeholders come together to address industry challenges and develop innovative solutions. This includes looking at ways to modernise the precious metals market, further instil trust and accessibility, and through these developments, increase the level of participation in the market.
World Gold Council
Wrap Up…
I had hoped, perhaps quixotically, that U.S. leaders would realize that resource scarcities are an existential problem for humanity and that the distribution of resources is highly tilted in favor of the South Eastern part of the world. Such a realization might push the U.S. to accept a new monetary system as a chance to start over, to step back from the current course, which I believe is taking this once-great country close to an abyss.
Instead, the U.S. has chosen a course that is inflicting major pain on our economy and even on our once-peerless military. But at best, it will merely delay the transition. And in the worst case it would lead to monetary or military catastrophe, even to the point of eliminating humankind from the planet. It’s almost as if some higher power is looking down and saying, it’s time to do something to prove you deserve to inhabit this wonderful planet…
