Perth Mint, Australia’s biggest gold refinery, announced its plans to create a brand new gold-backed cryptocurrency.
According to Richard Hayes, Perth Mint’s Chief Executive, the company is capitalising on the popularity of digital currency trading to lure back investments into Australia. Hayes added, “I think as the world moves through times of increasing uncertainty, you’re seeing people look for alternate offerings.” He also acknowledged the reason for the large influx of funds into cryptocurrencies such as Bitcoin: “And you’re seeing this massive flow of funds into the likes of Bitcoin at the moment because people are looking for something outside of the traditional investments.” Hayes explained that the planned creation of a gold-backed online money has the intent to “bring investors back to precious metals after a boom in alternative investments such as cryptocurrencies.”
Bitcoin was the first original virtual currency that was initially mined in 2009. Its cost rose to as much as $17,000 or £12,000 last December 2017. But its value has since plummeted to £8,300.
Hayes is planning to generate a virtual currency in the same manner as physical currencies are developed. Doing so, Hayes believes, would help make the former achieve a more stable price. It could also make people trust digital currencies more. He described the benefits of having a gold-backed digital currency: “With a crypto-gold or a crypto-precious metals offering, what you will see is that gold is actually backing it…it will have all the benefits of something that is on a distributed ledger that settles very, very quickly, that is easy to trade, but is actually backed by precious metals, so there is actually something behind it, something backing it.”
Currently, many digital currencies are not physically backed by any precious metal. These currencies are merely transferred from one peer to another through a computer. A gold-backed digital currency would therefore be the first in the world.
Most digital currencies available in the market utilize standard blockchain to keep a record in its system. The absence of a gold-backed currency forces everyone to merely rely on the blockchain technology to back the currencies.
Hayes highlights the value of using precious metals: “If you use precious metals to back something on blockchain or something that is allied to blockchain, it retains its intrinsic value, unlike the offerings from Bitcoin and Ethereum, which really rely on everyone believing that there’s something behind it.”
Perth Mint has made it easier for consumers to buy precious metals via an online trading platform at any time of the day for the past 18 months. Hayes said that their aim is to make gold easily accessible to “the ordinary man in the street”.
The Chief Executive expects the coming twelve to eighteen months to lead to an intended launch date of blockchain-allied products.