All that glitters is not Bitcoin
Many crypto projects are linking to gold but the first gold-backed digital currency launched back in 1995. E-Gold soon became plagued by hackers, scammers and money launderers and was shut down in 2007. Sound familiar?
There has been a lot of news recently about blockchain projects that are linking to gold. Humanity has loved gold for millennia because it won’t tarnish, is resistant to corrosion and rust and is strong, supple, workable and, for many, stunning.
It is, in financial terms, stable and has served as ‘the world’s currency’ for millennia. So how does it fit in with crypto-currencies?
In Dubai last year OneGram launched – under a nifty ‘In Gold We Trust’ slogan – which is what it says is a Muslim-compliant crypto. Islam believes business should be asset-backed and not based on speculation.
Which pretty much eliminates Bitcoin and most of the other 2,000+ cryptos.
Quartz reports that while crypto-currencies are not exactly banned in Saudi Arabia and the UAE, authorities have warned their citizens against purchasing them. And this has meant digital currency trading has been slow to take off in the Islamic financial world.
The OneGram coin is setting out to change that by linking each token to, as the name suggests, a physical gram of gold.
“With OneGram,” Ibrahim Mohammed, the CEO of OneGram told Forbes, “we are providing an opportunity for investors who care about Islamic financial markets and the security of commodity-backed investments to benefit from rapid technological advances in the blockchain industry.”
OneGram has partnered with the Dubai-based online gold trading platform GoldGuard that is now building one of world’s largest gold vaults. The vault will sit inside the Dubai Airport Free Zone. Now that’s something to think about when you’re next in transit there.
Someone else with a very large gold vault is the UK’s Royal Mint.
The Royal Mint says it has been making coins for the British Royalty and the UK government since 900 AD and has been storing gold bullion coins since the 14th Century. Today the Royal Mint claims to be the world’s “leading export mint” and makes five billion coins a year for more than 60 countries.
These are minted in its 150,000 square meter facility in Wales, which is also home to the Royal Mint’s gold bullion vault. For a pretty obvious reason it won’t divulge how much gold it stores there. But it owns something like 6% of the global bullion market and there is about six billion ounces of gold in circulation. And at today’s price of a little more than $1,300 per ounce, the total global gold worth will be something like $6.5 trillion, Which means the Royal Mint has … um, loads of gold.
Last year it leveraged this heritage and storage facility expertise to launch a digital service it is calling a “new digital gold standard.” It is, says the Royal Mint, “a convenient and secure way to trade physical gold using blockchain.”
And now the Royal Canadian Mint also has its own blockchain gold project.
Launched by New York-based technology provider TradeWind Markets Inc and backed by gold trading giant Sprott Inc, this blockchain-based “gold settlement system” will use the storage facilities at the Royal Canadian Mint’s vault and aims to reduce costs and simplify and speed up transactions by transforming what it says is now an “opaque trading system.”
Last year, the Kyrgyzstan government looked set to upstage everyone in the gold and crypto world when it said it would make history by launching the first state-backed, gold-linked crypto-currency, called, aptly, the ‘GoldenRock’ coin. However, alas, little has been heard of this world-changing coin since that initial announcement last June.
But actually none of this is that new. Back in 1995, in those heady days just before the first internet boom, the world already had a gold-backed digital currency.
Called e-Gold and based in the US, it became popular very quickly and by 2006 had five million users across the world. Wired Magazine tells the riches to rags e-Gold story well, explaining how, as an early form of digital trading, it came with more than a few security issues that needed patching. Combine this with the fact that the platform allowed for anonymous trading, and guess what, e-Gold became plagued by hackers and scammers and a horde of globe trotting money launderers who loved this new secret digital haven to hide away their illicit millions.
The FBI came knocking, and e-Gold’s founder, Douglas Jackson – who really seemed to think his visionary new platform was going to cure global banking of its faults and once described e-Gold as “an epochal change in human destiny” – ended up, for his pains, with a US Justice Department tracking device strapped to his ankle.
The US government shut down e-Gold in 2007. Sound familiar? More Bitcoin anyone?