free web hit counter

Exploring Gold Backed Cryptocurrencies To Stabilize Crypto Markets

Gold bar

Thomas Coughlin, the CEO for Kinesis, says that the out-of-control volatility in Crypto markets can be corrected through backing Cryptocurrencies to precious metals. He believes that the strategy will set a stable level of support that Digital Assets cannot fall below. Crypto markets have been volatile for much of 2018. For instance, BTC price has plunged from highs of $20,000 in the beginning of 2018 to the current lows of $6,500.

Gold As A Cryptocurrency Backup

Gold As A Cryptocurrency Backup?

The precious metal that is prominent in the quest of the Kinesis boss is gold. Since it is a store of value, it can be proffer to Cryptocurrencies such as Bitcoin, Ethereum, and many others the ability to have a minimum intrinsic value. This can, therefore, set a minimum price tag that the particular Digital Asset cannot fall below.

In itself, the value of gold is largely stable and its supply and demand dynamics are unique in a way that ensures its price is steady. Additionally, as a store of value, gold cannot compete with Cryptocurrencies as it cannot be used in transactions due to its nature of being indivisible to smaller units; an essential factor for a currency.

Hence, Tokens will be representations of units of precious metals such as gold, silver or diamonds. This will be giving investors the critical confidence to trade in Crypto markets.

Blockchain Networks Will Need To Change

For Cryptocurrencies such as Dash, Monero, Bitcoin or Ripple coins adopt the gold back up, there will be a requirement to redesign the network. For instance, Coughlin says that Blockchain networks that adopt the strategy have to create an easily exchangeable, secure, and immutable digital record of gold ownership in the ecosystem. The model will enable the select network’s users to clearly see the gold-backed tokens on the platform.

The Proposed Approach Will Challenge Fiat Currencies

In the past, fiat money was backed against gold. This means that all the money in use was printed in exchange for an equivalence of gold standards. However, the system was abolished and currencies are printed as per the dictation of central banks and monetary digressions. This system has proven to have mixed consequences where the negative connotations are more conspicuous. For instance, the American Dollar’s volatility throws the global money system into a crisis and erodes confidence in money.

Since there are no proposals to back up fiat money again, the backing up of Cryptocurrencies could make Digital Assets be more preferable as a unit of value. This is because they will be more stable, borderless, and secure. Furthermore, the creation of Cryptocurrency e-wallets banking solutions can be the defining moment for a total takeover of Cryptocurrencies in commerce.

About Kinesis

About Kinesis

Kinesis is a Blockchain firm that is based in the Isle of Man. It offers monetary services through precious metal-backed Cryptocurrencies. The end goal is to provide an efficient medium of exchange. Kinesis has two on-platform tokens which are KAG and KAU. The latter is backed by gold as the former is backed by silver. 10 grams of silver is equivalent to a unit of KAG while a gram of gold is equivalent to a unit of KAU.

Previous «
Next »