On Weds night, US time, Kinesis had a spaces conversation in AMA format. I’m going to reiterate my stance and discuss my conclusions with these attacks. I have some more constructive feedback for the Kinesis team I will write about in a few days, but for now, I wanted to get a quick(er) blog out about this.
Kinesis is – “the better mouse trap”.
“If you don’t hold it, you don’t own it”. This has been a battle cry recently of those who seem to be anti-kinesis. But….it makes zero sense if you look at this from 50,000 ft. Or, if you have two nickels to rub together, you realize you might need to store the next 20,000 nickels.
Many of you grass roots stackers have 20, 30, 140 ounces and it makes perfect sense to you. “NO COUNTERPARTY RISK”. But, if you think a little bit bigger than the walls of your home, many who are wildly bullish precious metals have a significantly higher net worth. Meaning, if they even put a small percent of their wealth into silver, you might be looking at thousands of ounces they would need to hold to meet that statement. VERY early on in my stacking career I became VERY leery of having PMs in the house. Especially with writing about this stuff. The good news is I also learned very early on to store more pounds of lead than oz of PMs. That helps, to an extent. But you realize very quickly that you do NOT want this risk in your home.
You frantically look on how to win in the PM move that is coming with converting every scrap fiat piece of shit toilet paper you have into shiny metal, but now you realize you can’t store at your home anymore. What do you do? My MAIN play with this has been miners. More recently, futures. However, I have been trying to de-risk Kinesis and add more in the form of KAG there. That time is now here.
With home stacking, you start to worry about risks of theft and fire. I think it makes perfect sense to perhaps have like 20 oz of silver, per person, in your home. Makes sense to have some cash as well in case banking networks fail. But to be anti-Kinesis based off of that statement “not holding it” is very, very silly. I have advocated many times on a LAYERED approach. In my layered approach pieces, I even advocated for Bob Coleman to get vaulting business. He has given a lot of his time to teach members of the community about a lot of this. I felt in my bubble world, that a Kinesis and Coleman could co-exist. Coleman could capture the over 55 old guard group of millionaire boomers with lots of cash to convert, whereas Kinesis would be able to get speculative money from them as well as the under 30 group with energizing them to stack silver and be able to spend it. Little was I comprehending how easy it could be for Kinesis to overtake traditional vaulting solutions that charge you money (where Kinesis PAYS YOU YIELD to hold) – and with this, Kinesis has recently been attacked from a million angles. More on that in the last section.
But I had advocated for everyone to get along. Bob can get boomers, Tom gets GenX and millennials, the end. But HOW you design YOUR layered approach is up to you. However, one thing I would look at would be things like “how much can I store”. “How can I get access to the value of the PMs”. “How much does storage cost”. “How can I fund this stuff”. “How can I get my money out”.
With Kinesis, it checks a lot of boxes for me. Can I vault the metals? Yup. Can I instantly transfer some of these to someone else? Yeah. Do I have a cost to vault the metals? No. Can I sell these pretty quickly? Yes, I don’t have to drive to a coin shop. Can I SPEND my metals real-time? Yes – if I was in Europe or Canada. Is it risky? Not as much as it used to be and getting better. Can I get GOBS of metal at SUPER low premiums? Yup.
With any new industry – the cryptometals are running into speed bumps, adjusting, and coming out of things stronger. What I call “Asset Backed Digital Currencies” I believe are here to stay. I also believe they are disruptive to existing bullion storage industries that charge fees to hold metals. I believe it is disruptive to other innovative business models that pay you to hold gold with them, in gold, by allowing metals to be “leased out”. Meaning – they give YOUR metal to someone else, with you getting a slice of the pie – with the intention that SOMEDAY the metals will be there for you when you want to take them out. They may very well be – but these industries are being directly challenged by all of these cryptometals.
I believe in the short term, cryptometals have an identity crisis that they need to address FIRST, and that is separating them from all 20,000 shit coins that are backed by nothing. This is what most NON-Asset backed cryptos are…
The blockchain is a ledger. You give someone YOUR fiat dollars and THEY give you an empty parking space with your name on it. This, is tulips. And Kinesis exposes this with “regular” cryptos not tying this space to anything but empty air. Therefore, anyone who also owns a shitcoin hoping it goes 1000x tomorrow also hates the very notion of Kinesis. Kinesis ties your space on the blockchain to ownership in metals.
What cryptometals are is a digital currency that allows you to spend your metals. This is what it is, digitally.
100 years ago, this piece of paper was a 1:1 substitute for an ounce of gold. Meaning, you could take this paper to the store and buy groceries with it. This paper was NOT MONEY. This paper was CURRENCY as a SUBSTITUTE for the money (gold).
What Kinesis and other cryptometals do is put your name on the blockchain tied to ownership of gold.
Meaning – in the FIRST case of NON-ASSET backed cryptos, the value of the crypto was SOLELY on the speculative value of the parking space. That in some near or distant future, the parking space will be worth more. Why? Because people may like to use the speed and openness of the blockchain for business transactions. I believe the crypto people got this right – but not tying the space to money is where they got it wrong. Why? How do you value an empty parking space? It has no inherent value, thus the token will never have transitive value. With Kinesis, they link your digital space to metals, so your token has the transitive value of the underlying metal. This is how you create currency in the 21st century.
You marry the crypto world with the gold world, and with this, you can spend your money (gold).
In the case of the ASSET-BACKED digital currency, the VALUE of the token is worth the value of the underlying asset. In this case, gold and silver. There are other types of asset backed digital currencies in existence – but these might be home/rental ownership, etc.
But why would you do this? In a lot of countries in the world (and coming here soon) you can see how currency is devaluing so quickly that people are trying to get out of cash rapidly due to how much value it is losing weekly. Places like Venezuela, Argentina, Lebanon, Zimbabwe – consider the idea that groceries cost you $100 per week, but by the time you get your paycheck, the groceries are now $110. Every week they see steep increases like this to costs – and they can SEE the paper fiat losing value before their eyes. Now, if they were to be paid in gold or convert excess fiat into gold, this gold promises to store that purchasing power.
If you are using the virtual debit card, at point of sale, it sells your gold and silver instantly into USD to pay for your sale. Perhaps that excess $100 you put into gold last week is now worth $110 this week. Meaning, at the grocery store you could spend that gold that went up in value. This is something that may come to most of the Western world. At some point, people are going to realize this is a runaway car heading towards a cliff.
I have been critical of Kinesis at times. Many of you confuse my criticisms. Wildly. You can be stupidly, wildly bullish on a product and yet still point out perceived flaws and risks. I was critical of constructive things. “I’d like communication to be better. Project timelines to be more transparent to stakeholders”. To me, it’s like buying a Bentley and then being critical that it doesn’t come in pearl white. You love the car, you just want more optionality with the features.
What I have learned a lot recently is a lot of those flaws are being ironed out and a lot of those risks are either mitigated or in the process of being mitigated. The call last night was spectacular, and those with more knowledge of Kinesis than me have reached out since my last article and helped guide me towards some solutions.
I’m not going to go into a lot of the Twitter drama I saw this last week, which seemed petty, personal, and attacks at the margin or fringes. Criticism I saw went from “there’s no gold or silver backing” to “well, it’s there, but I don’t like where it is”. This….is weak. I mean it’s fair to criticize a Turkey given Erdogan’s reign, but Turkey has been in the gold market perhaps going back to Constantinople. It’s also fair to point out that the US ACTUALLY seized gold. So there can be criticism, but there also needs to be bigger picture perspective. Once the audit came out, the narrative tried to shift, and whiffed terribly on mounting anything other than petty findings which don’t materially have any effect on the totality of the system. One can then go in and take a look at the blockchain and do your own audits against what the vaults have, and as luck would have it, they match.
Whenever you see some bluster on Twitter or something, you want to step in and defend a product you love. I did this with CryptoInformer in January, PRIOR to an article that was dropped by an unnamed person on a trivial site that used to write about things we love, and then suddenly switched to Tabloid Trash. He was clearly educated on blockchain items, but was not familiar with the Stellar blockchain or how Kinesis was using it. Rather than going to the Kinesis forums and asking questions – great leaps happened due to lack of understanding. I believe that regular AMAs/updates from Kinesis with technical questions like CI brought up could be answered in a professional manner. It’s an OPPORTUNITY for Kinesis to add more content to their page where misunderstandings occur. But for a lot of these accounts I’ve seen recently, once they are proven wrong on A, B, and C, they slither into the shadows, and another account comes up to attack on X, Y, Z. It is clear to even the most casual observer there is some form of attack here. Why, I don’t know. But I did spend some time writing back to CI to try and reach out and educate him on my understanding of his questions. Many of us will lean in and try to engage in a friendly manner.
However, things went sideways.
The last few weeks have been a learning experience for me. I had never realized this level of stuff existed online. First the “Big Jim” stuff at WSS. But the problem was then somehow trying to conflate persons at WSS with Kinesis. Kinesis was one of many entities that wanted to reach out to an audience of 600,000 rabid silver stackers. How the hell someone linked a corporate sponsor with the person running the group is beyond me. Also – talk of the “$53,000 donation”? Yeah – they donated 2,000 KAG. I was one of the recipients. If you signed up, did KYC, you got an ounce of silver. They got the 2,000 users, and with this, it was an incentive to learn how to use the platform and dig in to what the product was. It was my introduction to Kinesis, and in my eyes, one of the most brilliant uses of advertisement I’ve seen in my adult life. To insinuate that this was some sort of seedy “donation” to Big Jim or something was asinine, and no one actually bothered to READ THE GODDAMN PROMOTION.
Let’s get back to it. I have advocated for the layered approach for years – which includes many means of stacking. But what I’m seeing now is attacks left and right on Kinesis, C4SM, and individuals that are baselesss, unwarranted, and slanderous. Someone from one of these “news” sources had asked me in November to write for them after the holidays. I was SUPER EXCITED!! A couple extra bucks here and there writing about stuff I was doing anyway, and I could be then have some of these articles sold to entities with much larger circulation. Seemed awesome!! Had a conversation with the guy for 30 minutes. So happy…
Then………this person was at the forefront of all of this, and well, the levels of disappointment are extremely high. This person NAMED ME multiple times, and in articles, trying to bait me into some sort of schoolyard fight. Was he trying to ensare me into some investigation in November posing as my friend? Was he trying to get me to say something horrible about someone or something they could source me for? I didn’t give them the pleasure, but it was sure eye opening that people like this existed.
I’m 47, have a career, a family, and I’m crazy bullish PMs and writing about a lot of things like Kinesis. My “opponent” (who appeared as a friend to me in November) appears to be desperate to call attention to himself, defame everyone he can think of, feign apologies publicly, then do a 180 and turn around and personal attack, again. I have no time or bandwidth for Twitter feuds. I just feel sorry for the person behind the keyboard. It seems this person is troubled, has issues, and I really hope he finds the help he needs because once upon a time he was a valued resource to everyone. This person is somehow leading this band…
What’s interesting, is many people who are part of this band don’t realize this is what they are at this point. Anarchists, narcissists who need attention, and ill-informed people who didn’t do any due diligence, at all, before smearing people. Those who wish to lean in and ask legitimate questions will be welcomed with open arms and given answers in a professional and friendly manner.
The attackers appear to be coming from a lot of angles. At first it was “Kinesis is a SCAM, there’s no metal in the vaults” which, after the audit came out, then shifted to “OK – so the metal is there, but I don’t like that it is in Turkey”. FULL STOP. The whole premise of all of this was that there was no metal backing the tokens. They completely glossed over this and changed directions. NO – IT DOESN’T WORK LIKE THAT. You made a libelous statement, and rather than admitting you were wrong, you then attacked harder on the fringes, at the margins. Attacking clerical errors by an auditor. Nit picking on minor things. Baselessly calling out someone after they have told you their legal counsel provided a legal opinion. Most of these people have never owned property and tried to get things done – and how gray areas are all over the place as there are major gaps with laws, regulations, and how things operate with new industries. What you look for is a company who is acting ethically and going above and beyond to ensure that no practices they are doing could be seen as unethical. This is pretty much how the KVT stuff went down. Kinesis acted with ABUNDANT caution in treating something a certain way in case 5-10 years later a magnifying glass came out. Many do not realize that in 2018, this was all the wild west and FTX was not even a zygote yet to create the crypto shitstorm – you had companies like Kinesis and LODE doing the best they could where there was no clear laws or regulations. And to this day, they are navigating the choppy waters like experienced captains, adapting to every wave pulse hitting their hull and adjusting course correction where needed.
With these attackers – their initial concerns of “no metal” were assuaged, yet the attack kept up in spite of their arguments being disproven. It now is clear to me and anyone that listened to the spaces, that the attackers simply do not understand how the product works. They did not do proper due diligence to understand even the most basic concept of where the yields come from – calling it a “ponzi scheme” – clearly pointing out they have no idea what a ponzi scheme actually is.
I had been in touch with some people the past week – and I was able to get a graphic from them on how the money works. High level – the fees that come in are split up. IF there are no transactions, at all, it means no one is paid to hold gold. Meaning, all yields paid on gold are not coming from the sale of KVT or anything other than the fee pool. This most basic lack of comprehension which I understood the first 5 minutes of researching this product 2 years ago tells me that I am not dealing with sophisticated investigators. Not one of them actually read how this works.
Here is a link to the forum.
Had they simply leaned in and asked “where do the yields come from”, any one of about 10,000 rabid Kinesis users would have told them. Instead, they slung pig shit at anyone they could find. They named NAMES and INSINUATED and STATED FRAUD. For those of you not keeping score, in our country – in the USA – we have “freedom of speech”. Those slinging this THINK they are FREEDOM WARRIORS.
What these dotards do not understand is that legally, in the US, there is a freedom of speech of prosecutions by the government – with exceptions. Even the most basic law class covers this in the first 10 minutes. I have taken many law classes as a previous criminal justice student, then plenty of business law in college with my MBA.
Defamation is split into two areas. Slander, which is VERBAL false statements, and LIBEL which is WRITTEN false statements. Freedom of speech does NOT give you the legal right to defame entities or persons, and with this, the law allows for legal recourse via civil suits. The last three weeks I have witnessed one libelous falsity after another, to the point where I think people don’t have a clue all they were doing was presenting Exhibit A, B, C….X, Y, Z.
The website provides a LOT of this most BASIC information, that it appears these CRACK investigators never bothered to read for 5 minutes. While there were legitimate questions that many of us posed to Kinesis – these were in the form of respectful questions. These were legitimate questions about things like going concern – what happens if Kinesis the exchange runs out of money tomorrow? How do you get your metal? Kinesis is writing up procedures for this, and emphasized yet again that this metal they hold is not on their balance sheet. It was legitimate to ask about some things regarding the user agreement, but it appears Tom and Kinesis had made themselves available to Bob previous to this to discuss this and he had declined. Instead, it appeared he wanted to try and embarrass Kinesis in front of an audience.
In conclusion, what I have seen is a group of people who do not have the capability of even investing one hour into understanding how any of this works, but instead have spent the part of every waking moment the last 2-3 weeks producing libelous statements – one after the other, and attacking individuals. They have smeared their character, insinuating the worst. Parsing every word in every document to find some SHRED of “evidence” that their narrative is true. What is true, is that Kinesis is a newer company, in a new industry, with a lot of inherent enemies – traditional vaulting, Bitcoin maxis, shitcoin holders, LBMA, Futures maxis, boomers, “if you don’t hold it” crowd. What I’ve seen is these enemies reveal themselves and their motives. What they don’t realize is they literally just spent the last 2-3 weeks presenting evidence in a civil suit.
My advice for the enemies is to realize that Kinesis is not going anywhere, and to realize they have a seat at the table of a “layered” metals solution and try to work with them. You can realize the means of this is to bring sound money back again, and their projects are meant to create friction in the system to support rewarding gold holders. My further advice is to create legitimate concerns, write up questions, and engage in the Kinesis forums as respectful people leaning in wanting to learn more. Lastly, I would stop the personal attacks, today, as one day you may cross a line and the good graces and patience of these individuals may be up and you may find yourselves having your wages docked for the next 30-40 years. Meaning, keep my goddamn name out of your tabloid shit.
Rob Kientz echoed a lot of my sentiments on the call yesterday. He had some timely interjections, and he accurately reflected my concern as well about how to vault stuff after you have some ounces and want more.
With that, I’ll leave it here. My goal for this was to opine more on my sentiment, but also to BEG to stop the smear campaign going on against an innovative company that is trying to find partners expand their footprint in the metals community. You may not wave the Kinesis flag, but you need to understand that actions have consequences, and if you feel this is a hill to die on, I’ll see you in court if my name is uttered one more time in anything related to a smear piece. Otherwise, let’s all try and lean in and understand things better before we immediately jump to the worst possible conclusions about people. That was my warning shot. I’m here on Twitter for fun, learning new things, and educating. I will not engage in Twitter mud slinging, and ask that my name not be associated with any smear campaign directed at ANYONE or any entity.
Those of you on the fence about Kinesis, I hope you had some questions answered and realize this isn’t a 3 man operation in someone’s basement that started last week, but a multi-national conglomerate with a strong team who has been operating this project since 2018, ABX since 2010, are well funded, and have massive global connections at the commercial side – and are working with us to get the retail side moving. Things are changing in the world climate today, and Kinesis has an ability to get more and more PMs bought and used as money. I love the product – so much I’d love to work there someday. That may never be in the cards given where I live, but I can spend some time advocating for a product I love and admire what they have done to get to this point. No one said a startup would be easy. There have been bumps. But the FUD needs to stop, or at the very least, just absolute basic understanding of investigating methods and legal comprehension needs to be applied.
Lean in and ask your tough questions. But trying to smear characters and insinuate the worst when you do not understand something says more about you than the person you are attacking. For most of the attacks, it’s simply answered by spending 5 minutes actually reading how this works on the page. I’d advise you do so.
February 23, 2023 at 5:51 pm
Well done Nate, head above the parapet stuff. I am a Kinesis enthusiast, I bought a bunch of KAG and KAU when silver was about $19. I have been spending it on my virtual debit card in the UK with KAG over $23. It’s been great and as you say I have some metal at home and more than 100 times more than I have in KInesis in vaulted storage. Part of my aim is to take metal off the market so it can’t be used to short the price. All three layers do that in my opinion. I can’t spend my silver coins at the shop but I can use KInesis.
February 27, 2023 at 11:10 am
My Kinesis account executive has advised a few days ago, me that as KVT’s are not currently tradable and with no anticipated date on which that might happen, that if I want liquidity, that I sell my KVT’s on the open market for $1000 per. I would suggest that this means that that is what Kinesis believes is their market value???
February 27, 2023 at 12:38 pm
The other night on spaces, the ceo said that inside of a month, the kvt yields should start to be paid out. I don’t know when these will be freely tradable, but there are people who wish to purchase them. I am a buyer for any distressed seller who needs to offload cheap. I’d advise going to the kinesis forums and see if you can find buyers there for higher prices. If someone wants to offload for $200, $300 or so I’m a buyer all day long. I would offer more down the road, but I’m not a high roller and with this, I’m open to buying at discounts. It’s a 5-10 year hold for me, and many others kind of want to get rid of these now. Ok. Works for me.
February 28, 2023 at 12:20 pm
If and that’s a big IF for me, if Kinesis is not a scam then KVT’s will be a great long term investment. I own 200 of these babies, or ought I to say bad boys. I’ve emotionally accepted that they’re going to zero, so now I’m OK riding the dragon. I’m hoping I’m wrong. However selling for less than $1500 is not interesting to me. If the CEO said that yields would start to be paid on KVT’s within the month, why had Kinesis not published this information. It also appears that my account executive has no knowledge of this statement. May I suggest that you and I are in the same vehicle, and our KVT’s may go to zero ( my prediction) or will turn out to be a stellar investment ( my hope).
Wishing us both the best.
February 28, 2023 at 2:08 pm
So I don’t have nearly your number of KVTs. On the spaces call last week, Tom mentioned they should start getting paid out within the month. On some of my blogs, I’ve been (constructively) critical of Kinesis in regard to communications. I feel like there’s a MASSIVE gap there between what is in the “circle of trust” with execs versus what the support knows versus what the power user knowns versus what the everyday user knows. There’s room for improvement here so power/regular users are updated more frequently and concisely on what is going on.
First and foremost, Kinesis KVTs are NOT a “scam”. That needs to be your starting point here, as you have a lot of ill-informed people throwing terms around to scare the shit out of people like you for some unknown reason to me yet. If I wouldn’t know better, this has the makings of some sort of corporate attack, where they try and scare you into dumping into a market, when they can then scoop up KVTs at a supreme discount. This is the only logical conclusion someone like me can come to with the terminology the attackers are using, which is completely libelous.
For example, the claim started on the day of the WSS attack that “kinesis has no metals backing their tokens”. This then was proven false by the full audit done in January. The full audit had been scheduled and in the process of being done when these hit pieces came out. Now that the metal is there, they are completely ignoring this fact and pivoting to other means of trying to scare you off.
I posted a kinesis business model chart from the Kinesis site, where they recently in the forums posted a chart that shows how KVTs are paid from fees. The insinuation they have used with “scam” is that the selling of KVTs creates a ponzi where the yields are paid from the sale of KVTs. Anyone who actually OWNS anything on Kinesis sees how small the yields are, currently – with the belief that down the road they will increase as the product matures. The chart was to show that all of the yields that will be paid out to KVTs will come from the fee pool. CI was not accurate with his statements, as a matter of not understanding the business model. He errantly confused “revenues” with “master fee pool” – which the latter strips off revenues from fees that are sent to Kinesis operations. Meaning, he saw $21m as the revenue and not $50m that was mentioned by Tom. This was an error by him not understanding the most basic part of Kinesis yields, which are explained in a video over 7 minutes so a kindergarten kid can understand it. Unfortunately, it appears the attacks are not clearly researched or have a great understanding of the product, instead using ad hominem arguments of Kinesis = FTX. The fear they mean to cause I have no explanation for, other than to create some sort of dumping of KVTs by people.
Alternatively, they do understand the product, but are finding weak points to intentionally cause harm to Kinesis. These attackers seem educated, but either they are not actually learning how the product works, or they understand how it works and are simply misleading you intentionally.
It is entirely possible that the US destroys everything crypto in the path to rollout their CBDC and Kinesis is caught in that hellscape and suffers financially, perhaps causing it to close and the KVT going to zero. This is ultimately not ideal, but the real risk that lies with the business model and owning KVTs. That is unfortunate in a risk environment with cryptos, but that is not the definition of a “scam”. I’m trying to work with Kinesis on improving some things behind the scenes, and we’ll see if anything comes of it.
Part of my “day job” is that of a project manager in IT. I am certified with a PMP. I have felt that the product Kinesis has is SUPERIOR to anything on the market, but there is room for this startup here to grow into a powerhouse by improving their means of communication. I believe that is underway now, and with this, there was the Spaces last week, and I believe Kinesis will start to have regular AMAs to communicate out more clearly answers to questions people like you may have. Investors like me are used to detractors of the product. However, what has occurred in the last 3-4 weeks or so is akin to looking like some form of corporate espionage in how it has been run – just my opinion as an observer here as to what a reasonable person can conclude, given the allegations and then the irrefutable evidence provided by Kinesis to refute the allegations. Kinesis is hardening up their product by improving their communications to clearly show the falsities that have been presented as “truth”.
Kinesis is a “startup” in a new industry, with no shortage of enemies that stand to lose if Kinesis is successful. Just ask yourself who on God’s earth would pay to vault metal ever again if Kinesis can pay you a small yield to vault with them? You have to understand the players here that can lose, and it is in their best interest to create confusion, controversy, and misrepresent the product.
Stay vigilant. I’m hoping in the next few weeks a lot of communication improvements are coming to proactively protect against these types of smear campaigns in the future. I even hope to be part of that fight someday.