Disclaimer – I am NOT a paid spokesperson for Kinesis nor is this a paid piece by Kinesis. My investments in Kinesis are approximately .0047 of my holdings. I am a MASSIVE fan of their platform and what they are doing so I use Kinesis in this discussion how a tech writer may have used Microsoft and Apple as technical examples in the 1990s when writing about tech.
Right now, if you talk with anyone in your office about crypto you are looking like you are a wannabe Doge millionaire. I think most are suspicious about the term “crypto”.
What me and others have been TRYING to do is to try and segregate “unbacked crypto currency” from “metals backed digital tokens”. If you look under the hood with the blockchain and SHA 256 hashing and the payload that is being stored in the ledger – they are identical from an information systems standpoint. The ledger records Person A gets so much of Token Z from Person B.
The difference is Token Z is not backed by anything. And we are trying to scream from the rafters about what this really means. So far, it’s gone on deaf ears, but this piece may help the light bulbs go off for you.
Token Y is backed by gold, silver, and perhaps even emeralds? Platinum? Copper? Meaning, if you presented Token Z to someone for fair market value, there is nothing but air there. Nothing backing it at all. At least governments have promises that they will honor that fiat can be exchanged for goods, and they also back this promise with tanks and bombs. Your favorite doggy crypto is a token that looks like this:
Whereas a metals-backed token can be exchanged for this:
So I have had a lot of conversations with people that work closely with Kinesis. I’m also seeing people on Twitter being creative and calling the brand of crypto token like Kinesis and Lode as “crypto metals“.
Someone else contacted me via email and suggested a group of Kinesis fans are discussing calling it “Asset Backed Digital Currency”. Or, ABDC for short.
This is to differentiate it from those crypto currencies that are backed by nothing. And – what about the Central Bank Digital Currencies that people are discussing? The CBDC?
This is ALSO important as to why this ASSET CLASS needs to be defined, and quickly. This is a marketing game right now. I’m utterly convinced that metals-backed crypto solutions are a wave of the future.
Recently, we hear more about the central banks then discussing the SDRs. Or Special Drawing Rights – which essentially are a “basket” of worthless paper currencies they bundle up into a bag of paper shit, light on fire, and throw on your porch. Sorry, couldn’t resist that.
But wait…could the BIS (Bank of International Settlements), or the bank of central banks, be looking to perhaps back their currency with gold?
This could suggest that the SDRs or perhaps the CBDCs have some sort of backing of gold? Nothing official. While people may not ACKNOWLEDGE the gold standard, people tend to accept USD as paper because our Fed supposedly owns 8100 tons of gold. If they didn’t own any gold, why would you accept that paper?
Kinesis is one of the companies that now has an “Asset Backed Digital Currency” by offering gold and silver to back their digital tokens. Several other companies do this with gold and silver, and this is where you can see the “cryptometals” being used.
But this is BIG in that you can tie ABDCs to just about anything. IT is BACKED. Consider a future 10 years from now where you can literally buy barrels of oil? Pounds of copper? Lead? Uranium? Platinum? Lumber? Think about something like this even replacing a futures market? If the PEOPLE of the world could buy oil like this, and capitalize on its future value, and then trade it for other things, wouldn’t this make sense?
Remember in my “financial solar system revolves around gold” discussions? I even did a video series on it. How gold and oil oscillate in value over the last 50 years?
Imagine you could trade gold for barrels of oil, and barrels of oil for gold? You could play this arbitrage.
The WORLD of ASSET BACKED digital currencies IS crypto version 10.0. The EARLIER versions of crypto WITHOUT assets backing them will FLOOD from these items into ASSET BACKED crypto.
The crypto people 5-10 years ago were great speculators and saw the potential of the blockchain. NOW, we remove the un-backed speculative portion of the cryptos which made them unstable and exchange digital currencies BACKED BY ASSETS.
Come on…say it with me now….”bad money drives out good”? I believe people will start to understand what I’m saying, and when the light bulb goes off, their unbacked crypto currencies will look a lot like this:
Rather than this:
Because your ASSET BACKED DIGITAL CURRENCY is THIS:
Now, it’s very possible that things like gold/silver with the KAU/KAG become a cryptometal “currency” – where other ABDCs could provide you ownership of these items and allow you to actively trade for other items on an exchange.
THIS is the future. Not unbacked crypto.
I could ALSO see a future where all of these items trade relative to gold on these exchanges – and then an SDR/CBDC trade with KAUs to peg these to gold.
10 years from now you may be looking at an SDR/KAU ratio.
Finance 2.0, people. As Marin Katusa mentions time and time again, “skate to where the puck is going”.
ABDCs are where they are going. Right now, cryptometals are popular. We are standing up the financial solar system on the digital side with gold first, and now emeralds are coming and my bet is many other ABDCs are coming that back other items. All using the block chain to prove ownership on the ledgers.
So – my advice to all of you that have massive gains in unbacked cryptos? Run….RUN to exchange monopoly money for gold. At the very least, take some wins and rotate it into Kinesis KAU or KAG.
This is the future. You crypto guys kicked in the door, but this is where it’s going.
Remember – throughout history, gold and time and time again has been part of any reset. Now that we have gold stood up with ABDCs, it’s just a matter of time, not IF, this will become the center of all Asset Backed Digital Currency.
Remember Mises Regression Theorem (Thanks Rafi) – that the only reason people accept dollars is because it can buy gold with those dollars. One day when it can no longer buy gold, it will no longer be accepted as a unit of payment for anything. Your unbacked crypto and unbacked fiat are identical in reality of intrinsic value.
Gold has now been stood up in the blockchain. Now everything else will start to find its relative value to that.
June 17, 2021 at 8:00 am
Great work, Nate. While I totally agree in regard to “fiat” (non backed) cryptos that are “currencies” (bitcoin, litecoin etc), that they will suffer the fate of all fiat currencies and revert to their intrinsic value ala Voltaire, a distinction must be made between cryptos that have uses other than as a currency. A great example (I am a holder) is Theta. It holds 3 US patents, and its main feature is video streaming via the blockchain by sharing of unused broadband of network participants . It solves the internet’s main problem today, without the cost and radiation if the 5G rollout. A distinction must be made when discussing the crypto universe. It is not all bitcoin. Far from it, as bitcoin’s overall share is decreasing every day. Would like to hear your thoughts.