New Gold Backed Cryptocurrency Has Been Announced

By Joshua Krause

The most legitimate argument against Bitcoin, is the fact that it isn’t backed by anything tangible. While it does use math and cryptography to create scarcity, at the end of the day bitcoins are still just digits on a screen. In that regard, they aren’t that different from fiat currencies. Their value is dictated by confidence and belief, rather than real world value.

But that may be about to change. Not for bitcoin, but for digital currencies in general. The gold storage company known as Anthem Vault has decided to release a new cryptocurrency that is backed by precious metals. Each “coin” will be valued at 1 gram of gold, and will be called the “Hayek,” after Austrian Economist Friedrich Hayek. It’s slated to be released on May 25th.

In an interview with Business Insider, the CEO of Anthem Vault explained his reasoning behind creating the currency.

One use case for the Hayek coin, says Blanchard, is an alternative payment system for people in developing countries with volatile currencies. They could pay each other with the equivalent value of gold, if they each had Hayek coin wallets.

The other use case, he said, is if there is a massive distributed denial of service attack on the modern financial system.

“Talking with friends of mine in the intelligence agencies, they say this is a real threat,” he said. An attacker (he used the Russians as an example), “could create a massive DDoS attack, make the [financial] system inoperable. Ultimately this is how we rely on our payments.”

If a big attack hit the computers that clear payments in the banking system, people would be unable to pay for things. Bitcoin and other cryptocurrencies based on the same technology don’t work like that. There’s a decentralized system of confirming that a payment has been made, so systemic failure is (almost) theoretically impossible.

Basically, this will be an alternative to the volatility and vulnerability of central bank issued currencies. It has the added advantage of making precious metals more versatile on the global marketplace, since physical delivery is not required.

But that brings up a troubling issue. It’s nice not having to take a delivery for every transaction, but it would also be comforting to know that you could take a delivery for physical gold if you wanted to. After all, is a currency truly backed by gold if you can’t have the gold?

So far, Anthem Vault has yet to say whether or not you’ll be able to cash in your digital coins for gold. If they did, it would create a system of checks and balances between themselves and the customer. They would have to keep a large amount of gold on hand, or else their currency will be worthless if too many people withdraw.

But if you can’t exchange your coins for a real-world product, then their currency is no better than paper gold. It’s just too tempting to say that you have the gold in a warehouse somewhere while issuing as many digital coins as you want. And that brings up another question.

We don’t know if their cryptocurrency will allow them to add new coins. It would make sense if they could. What if people bought so many coins that they were worth more than the gold they have stored? You would have to issue more coins to make sure the currency has an accurate value. But if people can’t exchange the coins for real gold, then they have the option to rake in the cash while issuing as many worthless digits as they like.

So if you’re a gold or cryptocurrency enthusiast, I’d hold off on this for now. It might turn out to be a great idea, but until all the facts are in, it’s a little too risky for my taste.

Joshua Krause is a reporter, writer and researcher at The Daily Sheeple, where this article first appeared. He was born and raised in the Bay Area and is a freelance writer and author. You can follow Joshua’s reports at Facebook or on his personal Twitter. Joshua’s website is Strange Danger.

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3 Comments on "New Gold Backed Cryptocurrency Has Been Announced"

  1. Is that Soros I smell??

  2. “Not for bitcoin, but for digital currencies in general.”

    A few years ago, the UK was considering backing Bitcoin with the Gold and Silver standard, and this does follow Greenspan and others pointing out precious metals as gold is true currency…
    By the way, the government’s financial regulations was contemplating avenues in relation to Crypto-Currencies popularity at the time as well as JP Mogran patent pending on the topic.

    “The most legitimate argument against Bitcoin, is the fact that it isn’t backed by anything tangible.”

    When you got a lot of time to pass, you should research Local Alternative Currencies and Local Alternative Networks. Both have their roots in such as Chatham House among others, and Chatham House is largely funded by the Rothschild-Rockefeller dynasties. If you dig deep enough, it makes it clear the endgame is designed to accept Cashless Authoritarian Governance. They’ve been testing a Crypto like currency for close to 15-20 years. The beta began as a 0 interest credit in over 100 localities when I initially looked into it.

    “After all, is a currency truly backed by gold if you can’t have the gold?”

    I doubt it.
    You’d be amazed what’s in articles, journals, and etc from memoirs, think-tanks, and etc…

    • TheTruthGetOutOfSchool | May 7, 2015 at 8:07 pm | Reply

      “I’m interested; talk. Just kidding. I am interested though. I had heard
      that bitcoin was created much earlier. How is it that you know of the
      early adopters? Can you explain why they would ‘lie’ about the creation
      date of the protocol? Are you suggesting that bitcoin is controlled

      “I created the protocol when I was 14 years old attending Harding
      University High School in Charlotte, North Carolina. It was an
      assignment exploited by government. It’s NSA. All the early adopters
      attended that school as students or were instructors there: Jeff Garzik,
      Gavin Andresen, Jon Matonis, Andreas Antonopolous, Edward Snowden,
      Peter Todd, Ross Ulbricht, Mark Karpeles, Mark Zuckerberg, Winklevoss
      Twins, etc. They were all there from the start. Way back in 1998.
      They’ll deny it, but it’s pretty hard to cover up. I lived in Charlotte
      for a good 3 years. They’d have to delete all the school records, get
      rid of all my classmates, EVERYONE.”

      – Chongchen Saelee

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