Boooom - it's going nuclear

[Martlet]

That does actual make sense, as from this description you dont hold any interest in the gold once you sell the Kinesis coin - the holder of that is the title holder to the gold, while the original "minter" retains an interest on the future transaction revenues.  I'm not sure holders of physical would want to do that, but i can see institutions liking the revenue from "monitisation" of gold.  I'm unclear where/why the German Stock Exchange comes into the whole process, surely you'd just sell the crypto coin through a dedicated exchange (or APX), or the existing crypto exchanges.

 

[KDave]

Kinesis is a blockchain based security and not a crypto currency? 

If correct it is in the same category as an ETF? Say an investor wants exposure to gold, they can buy kinesis tokens on the german stock exchange, much as they would buy shares and in the buy/sell spread 0.05% of that is the yield paid in USD to the creator.

Early adopters will reap greater rewards because they will have a greater chance for their tokens to be exchanged more often, but what if someone buys your tokens and just holds them for the rest of their life, you get no yield? 

[Martlet]

18 minutes ago, KDave said:

Kinesis is a blockchain based security and not a crypto currency? 

Interesting and important distinction there, they refer to it as a cryptocurrency in the mp3.  They imply it would be traded peer to peer.

Re-listening, 16:00 onward he's taking about the original gold owner retaining the gold after its "emitted" into the Kinesis system and create a yield.  The other chap then goes onto talk about gaining yield from people trading around... that just means people from outside have to keep buying the coin to generate transaction fees.  hmmm. 

[KDave]

The podcast is a challenge. I am struggling, but there appears to be two people that matter to make it work - the 'token creator' and the 'vaulted gold investor' - important to note that the creator can care nothing for gold because their interest is only in USD, both for selling their tokens and in the yield that is generated. The gold investor wants his paper exposure backed by gold and wants the built in security of blockchain to confirm this for him, I understand the attraction over a traditional ETF. I think it will sell. It will certainly attract investors. It should do well. 

How does the bullion bank recoup its storage costs once the tokens have been sold by the creator? Are they going to act as market maker on the stock exchange for these tokens and will benefit from the spread to recoup costs? I assume so, unless holding these tokens will come with a fee of which they will benefit, like a traditional ETF. Its quite genius for the bullion bank. They get investors to buy gold to vault in their bank, and then benefit from that by generating fees left right and center, vaulting fees, transaction fees, then constant income from buy/sell of the tokens if they are involved. The investors get a yield which is dependant on velocity of the tokens, so could be high, could be low, but they get something back for helping the bullion bank set up its new income stream. It looks to me like there isn't any risk here for the investor beyond the short holding period between buying gold, getting tokens and selling them - you buy gold, get tokens, sell tokens for the same value or more than the gold you bought, then get a lifetime yield for your time and your money back. Rinse repeat. 

This works as long as the velocity of the tokens remains enough to cover the bullion bank vaulting cost I guess, unless like we say the fees are covered in an annual 'ETF like' fee. It would be advisable to charge such a fee, as it would help with velocity, which in turn benefits the initial investor. I am not sure where the story ends, but I do like sixguns worst case scenario version. 

 

[C12]

It sounds similar to the Onegram ICO offering where a percentage of transaction fees will go into purchasing more bullion to back the coin.

Ultimately people buy gold for peace of mind and I would probably chose RMG, even though their product may not be as attractive as some of the others. 

I'm not interested in using gold backed cryptos as a currency. I just want a secure way of easily moving in and out of gold with zero storage costs and low transaction fees.

[PansPurse]

So, unlike say bitcoin where the new tokens effectively pay for the cost of operating the system, this one uses transaction fees to pay a royalty to the person that first puts gold into the vault, and pay for running the system, and pay for the vaulting costs... and this will work because having a transaction fee will somehow encourage people to trade?!?

[KDave]

45 minutes ago, PansPurse said:

So, unlike say bitcoin where the new tokens effectively pay for the cost of operating the system, this one uses transaction fees to pay a royalty to the person that first puts gold into the vault, and pay for running the system, and pay for the vaulting costs... and this will work because having a transaction fee will somehow encourage people to trade?!?

Having a holding fee will encourage people to trade, otherwise people can just buy and forget like bitcoin. I suppose you mean why bother in the first place if it costs to hold, but people do, evidenced by the amount of vaulted gold. Having a transaction fee is fair if this thing is like an equity and not a currency. Though if it's traded peer to peer then the fee concept has lost me again. Peer to peer suggests it can act as currency but no transaction fees would be generated this way... I look forward to the white paper because I have more questions and doubts than answers. 

Regardless, if it works and generates physical gold demand while simultaneously draining demand for other paper gold then it's all good.

[PansPurse]

5 minutes ago, KDave said:

Having a holding fee will encourage people to trade, otherwise people can just buy and forget like bitcoin. I suppose you mean why bother in the first place if it costs to hold, but people do, evidenced by the amount of vaulted gold. Having a transaction fee is fair if this thing is like an equity and not a currency. Though if it's traded peer to peer then the fee concept has lost me again. Peer to peer suggests it can act as currency but no transaction fees would be generated this way... I look forward to the white paper because I have more questions and doubts than answers. 

Regardless, if it works and generates physical gold demand while simultaneously draining demand for other paper gold then it's all good.

So, it sounds like on some level it's similar to other systems where you own gold in a vault. Except that, in addition to covering the costs of vaulting, through holding/transaction fees you're also paying for the running of a blockchain and paying a royalty to the person that first puts the metal in.

The only people who actually see any benefit from this compared to any other system would be those putting metal in at the start, but then their only returns come from convincing others to do downstream trades... again this sounds a hell of a lot like a pyramid scheme. Oh, and even then there are important factors like what will the spread be for putting metal in and taking funds out (i.e. will you be losing money compared with spot by re-investing? I'm going to guess yes)

[KDave]

It's not a pyramid as far as I can tell, but there is an advantage to early adopters in that they have greater chance to see those tokens turn over. The fees will need to be comparable to existing products or it will lose a lot of customers. I would say most people will buy the tokens as a gold investment and not bother with the creation of them. I can't see the risk to the initial investor and if the tokens are 100% gold backed and redeemable and cost the same as other paper equivalents then it's a good move forward. 

I'm with you though, I'm skeptical until I know exactly how the business operates which we won't know until the fee structure is revealed and how this 'thing' is traded in every sense of the term. 

[PansPurse]

14 minutes ago, KDave said:

It's not a pyramid as far as I can tell, but there is an advantage to early adopters in that they have greater chance to see those tokens turn over. The fees will need to be comparable to existing products or it will lose a lot of customers. I would say most people will buy the tokens as a gold investment and not bother with the creation of them. I can't see the risk to the initial investor and if the tokens are 100% gold backed and redeemable and cost the same as other paper equivalents then it's a good move forward. 

I'm with you though, I'm skeptical until I know exactly how the business operates which we won't know until the fee structure is revealed and how this 'thing' is traded in every sense of the term. 

The suggestion that they can have comparable fees to existing products, but also pay for a blockchain and royalties to metal providers raises a shedload of red flags

[Shinus73]

The fundamental question I have:

‘Why would I buy a kinesis coin (or whatever it may be called), when I can simply buy physical gold instead?’

But then I’ve never understood the attraction of paper gold, of which this seems to be another variant.

[mr-dead]

It seems that is like a bullionvault concept with a decentralised trading element.

[TheGoldSovereign]

This is ridiculous, do not give your gold to someone else to control. Every single industry and business out there seems to be getting in on the buzzword blockchain, but 99% are not solving any real world problems. This is just another or them trying to turn their millions into billions.

If you want to speculate and try to profit from one of 10,000 "ICO", coins, tokens etc, go ahead.

[Martlet]

6 minutes ago, sg86 said:

This is ridiculous, do not give your gold to someone else to control. Every single industry and business out there seems to be getting in on the buzzword blockchain, but 99% are not solving any real world problems. This is just another or them trying to turn their millions into billions.

If you want to speculate and try to profit from one of 10,000 "ICO", coins, tokens etc, go ahead.

Interesting point with gold backed ICO is there isn't scope for speculation, the asset backed coin is tied to the value of the asset.  I've been thinking about this as a good idea, somewhere to park bitcoin in periods of fluctuation, and going to look at such gold offerings.  Would be ironic that the old world gold comes into new tech world to provide a safe haven, same as it ever was.

[sixgun]

42 minutes ago, Shinus73 said:

The fundamental question I have:

‘Why would I buy a kinesis coin (or whatever it may be called), when I can simply buy physical gold instead?’

But then I’ve never understood the attraction of paper gold, of which this seems to be another variant.

You could buy GLD to trade. There are transaction costs to this. The shares are allegedly backed by gold in vaults. You can trade GLD through stock exchanges and it clears like any regular ETF/stock.

The issue then comes to taking possession of the gold you are supposed to own by owning the ETF. You cannot get the gold unless you have many $millions of stock and probably aren't within the cartel of banks. You discover the shares are not redeemable. When you dig around you discover there might not be all the gold there is supposed to be. The gold is not allocated and segregated. That the vaults could potentially be empty and you actually have no gold at all. You discover you have not invested in gold you have just got a piece of paper or rather digits on a screen.

You could invest in options and futures. Well these need a lot of capital and you aren't going to be able to get hold of your gold, the COMEX has very little gold and it is spinning cartwheels at the moment with EFP's.

So you could buy a few sovereigns from a dealer. Now sell those sovereigns. Is it a click of a mouse? Is there liquidity? Can you send that sovereign across the world? Is the sovereign vault safe? Can you spend the sovereigns on a card?

Problems problems.

This is not like paper gold. Paper gold is unallocated irredeemable. It generally does not exist. Kinesis is title of ownership of allocated segregated gold. It is a vaulted bullion deposit you can sell on an exchange, you can spend and you can transfer across the planet.

As the coins are linked to the gold price b/c they are title over gold they are real money. Money has got to be stable. BTC is anything but stable these days. The number of BTC an item costs is all over the place and a vendor taking BTC might find he gave value at $20 000/BTC and a few weeks later it is worth $10 000/BTC. Not very good.

Characteristics of money

• Durability. You cannot wear out a cryptocurrency
• Portability. You can take the coins anywhere - the gold is in the vault but the coins are electronic
• Divisibility. As far as i am aware they will be divisible - they go down to 1g gold for sure
• Uniformity. All coins are equal in value but unique - they are title of ownership, they are a ledger
• Limited Supply. Supply is limited by the amount of gold in the vaults - fully backed fully redeemable.
• Acceptability. Would you take a bank note back by nothing or title of ownership over gold?
• Stable. This is asset backed money - 100% backed. It is gold or silver the ultimate stores of value.
• Transferable You can send your coins with a click of a mouse, spend them on a card, sell them on an exchange and so covert them to fiat.

This is money, it checks every box. This also have features of a stock but it is much more. This is many things

 

[KDave]

54 minutes ago, sg86 said:

This is ridiculous, do not give your gold to someone else to control. Every single industry and business out there seems to be getting in on the buzzword blockchain, but 99% are not solving any real world problems. This is just another or them trying to turn their millions into billions.

If you want to speculate and try to profit from one of 10,000 "ICO", coins, tokens etc, go ahead.

It's not giving someone else control any more than other paper products that offer additional liquidity over physical. Physical is in a different category and this product is not targeted at stackers (for lack of a better term), I believe it is targeted at institutions, traders, anyone who prefers a receipt to a safe.  

If you are seeding capital to generate these crypto you are trading USD and end up with profits and royalties in USD. Buyers and holder of the crypto get a ledger based paper claim in my view, paper because the block chain can't guarantee what's actually in the vault! 

[sixgun]

17 minutes ago, KDave said:

It's not giving someone else control any more than other paper products that offer additional liquidity over physical. Physical is in a different category and this product is not targeted at stackers (for lack of a better term), I believe it is targeted at institutions, traders, anyone who prefers a receipt to a safe.  

If you are seeding capital to generate these crypto you are trading USD and end up with profits and royalties in USD. Buyers and holder of the crypto get a ledger based paper claim in my view, paper because the block chain can't guarantee what's actually in the vault! 

i have very little doubt there is gold and silver in the ABX vaults. i have very significant doubts about SLV for example. We can never know b/c we will never be allowed to redeem shares. The ABX has been vaulting allocated gold for a fair while and i have not come across complaints people could not get their gold. My family has metal in various hubs on the ABX - i will be glad to create Kinesis with this and sell these to buy metal all in one place as a housekeeping exercise.

My concern is when this gets heated and the paper paradigm is coming down, will the criminals raid the vaults and steal the gold/silver claiming ISIS stole it. These people are no more than clever criminals with all the guns to back them. That is my concern. It will not replace my stack - i will still want to hold metal i can look and paw at but i have a lot of paper metal investments which make me nervous. They are great to trade with but they make me nervous. i would rather i had them in something like Kinesis especially if i use the cash to mint lots of coins and so build up an income stream.

This is not for dyed in the wool stackers - this is for traders. It also good for people who have a bank deposit that is getting no interest and could get baled in. For people with SLV and GLD.  It is for the Muslim world who want to be Sharia compliant. They do not like banks - banks are generally not compliant. So they end up getting ripped off by Western Union and the like. This is a much better value way of moving value and outside the usual banking system.

[Oystonousted]

What entry level of investment is possible here assuming anyone can invest here?

[KDave]

From my point of view there are two things happening here. There is primary investment - creation of tokens, building up an income stream which is great, yield for no risk or stake, just your time, what is not to like. Then there is the secondary investment, a perspective of creating tokens to hold or buying existing tokens. This vaulted crypto gold security or whatever you want to call it, beats paper gold so long as the token remains redeemable at a reasonable fee and this is pushed to test frequently enough to keep the bullion bank straight. 

I am interested in making some tokens but I'm not interested in holding because I'm not a trader so have no use for the liquidity and prefer to eliminate the exposure to bent bullion bank potential. Lifetime yield for a bit of time sounds good to me though, what is the minimum investment here? The abx crypto exchange isn't open yet so as a small timer I'll be waiting for that to happen I guess but if they are wanting a kilo of gold a month to seed tokens then it's well out of my reach. 

[sixgun]

23 minutes ago, Oystonout said:

What entry level of investment is possible here assuming anyone can invest here?

The White Paper will be released soon, i have been told this week. Maguire's son told me a few months ago you could go down to 1g of gold. Under BullionCoin they wanted minimum $250k investors which was a last minute turn up and i think one reason the ABX walked away. i don't know for sure but i am working on the basis a minter would need 100g gold and 5kg of silver, although 1kg silver is possible. This is the smaller size of bars on the ABX.

i expect you will be able to create 100g of gold Kinesis and then never do it again. If you can hold the gram metal on the ABX so 100g gold and 1kg silver then you can have it recorded on the blockchain and you can then sell the coins. We will have to see.

The main point here is there is a potential to disrupt the paper market which will affect everyone in the precious metal community.