Kinesis is a new monetary system – it’s Sound Money in the Internet Age.

I conceptualize it as what the Dollar was back before the Fed, but modernized:

Money was gold and silver, stored in banks
Dollar bills were receipts for those dollars, which worked better for day-to-day trade

So if someone paid you with a $20 bill, you received a piece of paper that could be exchanged for a $20 coin at any bank, and that coin contained 0.9675 troy ounces of gold. (That’s worth about $1,760 in today’s dollars – inflation is a beast.)

Kinesis is the same concept, but it uses a blockchain instead of paper receipts, it leverages that blockchain to produce a yield, and it allows you to spend that gold and silver anywhere in the world, in seconds.

A lawyer I met through Kinesis explained this much more clearly than I can:

What Kinesis is doing today that is unique is to return to the concept of a “bearer” receipt for bailed, fungible gold and silver at a certain guaranteed fineness. This is what paper money once did as a receipt to a claim on silver or gold held/bailed at the local bank originally and at the Treasury later on. It is a “bearer” instrument, meaning that anyone who possesses the receipt for the bailed metal can use the receipt to trade for goods and services. The receipt itself becomes as good as gold.

But paper receipts for bailed gold or silver are clumsy in today’s digital world. The vision of Kinesis was to re-establish bearer receipts for bailed gold but move the receipts to digital form, AND to make those digital bearer receipts highly liquid and trackable through the use of a blockchain network, and one that actually works at scale, unlike the Ethereum failure.

The blockchain concept allows for very fast and easy negotiation of digital bearer receipts.
– A lawyer I know

That sounds hard to believe, doesn’t it?

How it works

I wrote this whole site to explain how it works, but simply:

When you buy a Kinesis token, you’re buying legal title to one troy ounce of silver (KAG) or one gram of gold (KAU). The Kinesis blockchain is the immutable record of ownership. Kinesis owns no metal – it is always titled to the holder of the account. Note also that when buying the metal you will generally pay within a half-percent of the spot price. There aren’t any significant premiums here.
This gold is stored in more than a dozen vaults around the world. These vaults are run by vaulting companies like Loomis and Brink’s, are audited by a third party auditing company, and are insured by Lloyd’s of London. You know it’s secured, you know it’s there in the quantity and fineness it should be, and you know that should something happen to it anyway, the insurance will kick in to make you (and all owners) whole.
You can spend that metal, but when you spent it (either on a debit card, or by transferring directly to another user) you’re assessed a small fee of between 0.22% and 0.45%. If you decide to convert it into another digital token or back into your fiat currency of choice, that’s also a 0.22% fee.
If you’d like to get it delivered, you can do that too. The smallest delivery option is 200 ounces of silver or 100 grams of gold. This costs $100, plus 0.45%, plus actual shipping and insurance. You’ll receive whatever was in stock at the vault closest to you.
You’ll get holder’s yield while you hold it. Kind of like interest in a savings account, but it’s not interest as it’s driven by those fees we talked about, and it’s variable month-to-month.

An Example:

Let’s say you want me to host your web site, and I charge 1 KAU per month to do so.

When you pay me, I’ll receive 1 KAU, but you’ll be assessed 1.0045 KAU, and that additional fee goes into something called the “master fee pool.” For reference, as I’m writing this one KAU is worth $58.29, and the fee you pay to make that payment is equivalent to 26¢, but paid in metal.

Now the master fee pool contains your 26¢ in addition to everyone else’s fees, and the master fee pool sits there growing with each transaction until the end of the month. In the first week of next month, these accumulated fees are paid out in the form of various yields. 57.5% of yields go out to users, and Holders get 15% of the master fee pool, distributed proportionally.

This video is probably a clearer explanation: