Gold backed crypto? How about crypto-backed gold?

Yesterday I responded to a post from @X22report which was a good interview but with some confused terminology. For example the interviewee talked about a gold backed crypto-currency. Fundamentally this is a backwards way to think about crypto-currency and gold. It's not that a crypto-currency needs to be backed by gold to give it value, it's that gold already has value but it needs a crypto-currency to give it utility.

What do I mean by utility?

There are many crypto's that do not have utility, the elephant in the room being Bitcoin. As a technology, a crypto without utility really has little to offer unless it is widely adopted by the mainstream. This is hardly likely to happen any time soon with crypto's that act purely as currency, there is just too much opposition. A crypto without utility can only, therefore, be a short term speculative play. The reason for this is that technology is always evolving and much more quickly so in the past 5 – 10 years. In no time at all Blockchain based crypto-currencies will be usurped by improved decentralised ledger tech, such as Hedera Hashgraph or Tangle. These distributed ledgers do not require mining on a massive scale to grow their digital assets and they have more secure protocols. Expect much more evolution in the distributed ledger space. New technology will emerge that introduces additional security, convenience and ease of use and adoption (one of the main barriers to entry for the blockchain as it stands today).

Crypto's with utility are much more likely to be around in 5 years while Bitcoin, Litecoin etc., will likely be far less prevalent if they survive at all. Utility could be anything from supporting smart contracts (such as Ethereum) to providing an underlying fabric for the internet of things (such as IOTA). There are many other interesting blockchains, not least is Steem that supports the blogging and social media platforms here on Steemit.

What about Gold

Gold in it's own right has been money for generations, however, as technology has improved and the bankers have found ways of providing a means of exchange that enriches only themselves, gold has become a less popular means to transact. We now swipe smart cards and devices across NFC receivers to transact without the need to even carry notes in our pocket, let alone coins. However, the digits that we now transact with are debt. The fiat money itself is a debt based currency and we use credit cards to borrow that debt based currency. It's debt stacked on top of debt, a farcical situation indeed that has reached a tipping point. In order for productivity to grow more debt must be created which results in ever increasing debt repayment cost and even more debt still. Fiat currencies, in their early days, were preposterously beneficial to those families that introduced them to the world, enabling them to gain ownership and control of almost every nation. They now control governments and corporations, in darkened, hidden places, like a puppet master controls it's puppet.

A gold crypto-currency could deliver a solution to hundreds of years of debt and manipulation. Gold, in it's pure form, is unwieldy in today's highly technological and fast paced world. It is unimaginable that we would return to a time where we would carry around little purses containing gold and silver coins that we would use for every transaction. What would be the point when we can just swipe our phone to complete the transaction?

Crypto-gold on the other hand provides gold with utility. The decentralised ledger, whether based on blockchain or another more advanced decentralised ledger technology, would provide gold with three things:

• The ability to have an immutable record of ownership and transactions.
• A highly secure method of protecting ones holdings.
• A fast means to exchange holdings.

Of course, the decentralised ledger alone would not deliver an all in one solution. What is also needed is a trustworthy and secure means to store and allocate physical gold holdings (there are already solutions in place such as Bullionvault) and also a means to transact, such as a smart card or secure phone app that connects directly to the decentralised ledger to authorise payments and exchange currencies.

What will likely emerge is a decentralised ledger technology that is combined with trustworthy, allocated storage and a high technology transactional solution that makes owning and exchanging gold both easy and convenient. There are already emerging crypto-gold standards such as the Royal Mint, Digix, OneGram etc., but so far no single standard has emerged as a defacto standard.
I wrote about this some months ago here:
https://steemit.com/steemsilvergold/@unclehermit/is-this-the-crypto-gold-you-ve-been-looking-for

What does the future hold?

It's still early days for crypto-gold but clearly others are thinking along the above lines. Already other asset backed crypto's are emerging to provide more robust solutions in oil, diamonds and other assets. A crypto-gold standard that is easy to use and convert to existing currencies will emerge and be quickly adopted in preference to non-utility crypto's as people wake to the realisation that it is gold that is, and always has been, real money, not paper promises and not digits stored on a blockchain somewhere. Decentralised ledger is simply the enabler that will return gold to where it rightfully belongs. To back an honest monetary system.