Saturday, May 13, 2017

Will the future of crypto-currencies be fiat like Bitcoin, or gold backed like the CME is creating?

Despite all the hoopla of crypto-currencies like Bitcoin being the potential future of money, the fact of the matter is they are no different than nearly all other currencies except that they will be limited in production, and outside the control of governments and central banks.  And it is this caveat of being a fiat based currency (backed by nothing) that could find gold backed digital money a more favorable choice for individuals to own.

Last week we wrote about a new gold-backed crypto-currency being created in the country of Dubai, which is pretty certain to be backed by real gold since they are required to follow the new standards laid out by the Sharia Finance Council back in December.  And on May 11 the Chicago Mercantile Exchange has now joined in the movement to put gold and silver on the Blockchain when they signed an agreement with the British Royal Mint to create their own gold backed currency that is expected to also be tied directly to physical gold.


Because of its scarcity, portability, divisibility and current valuation, many people are calling bitcoin the modern "digital gold." And like gold, bitcoin seems to be establishing itself as a popular store of value. 
But now CME Group, one of the world's largest providers of gold futures contracts, wants to bring real, physical gold to a blockchain-based asset, and it has landed a big partnership with the U.K.'s Royal Mint. 
By any standard, CME Group is a juggernaut in the world of high finance. Handling approximately $1 quadrillion worth of derivatives contracts annually, it is an influential player in the global gold market. And having roots in commodity trading since 1898, it is no stranger to the challenges of an evolving marketplace. Which is why the company has now set its sights on blockchain technology. 
According to a blog post by Sandra Ro, CME Group's head of digitization, the new asset will be a token known as RMG (Royal Mint Gold), and backed by physical gold in the Royal Mint vaults. Currently being tested for security and speed, RMG will allow instant transfers of gold to anyone anywhere in the world. And, Ro insists, it will bring a new era of accountability and gold-trading standards, saying, "There is no rehypothecation, there is no lending on that gold, and there will be enough physical gold to represent all the RMGs that are issued." With an initial launch planned for summer of this year, The Royal Mint plans to back the token with up to $1 billion in physical gold bullion. - Nasdaq

2 comments:

Ken,

You might be interested in this article from FOFOA:

'We'll probably see the dollar exchange rate spike really high at first, even while the stock market bubble is collapsing.
'
http://fofoa.blogspot.sg/

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