Kinesis.money, as I see it, is about sound money in the 21st Century. This has to be more than just physical metal.
Wanna buy my car?
Let’s start with a simple example. The average price for a used car in 2020 was around $22,000. So let’s pretend you are looking to buy a used car, and you see my ad for a model you’re looking for, priced at $22,000.
We meet on a weekend because neither of us are working then, inspect the car, look at its records, take it for a test drive. Maybe we swing by your mechanic to have it looked at (or maybe I did that earlier in the week at your request and at your expense.) Regardless, I’ve got a car for sale, and you decide you want to buy it. What now?
Well, first we agree on a price. Let’s say you talk me down $2,000, so now we each need to act:
- I need to sign over the title and create a bill of sale.
- You need to pay me $20,000.
It’s that second point that might cause a problem. How are you going to pay me? If you trick me with bad payment, I’m out $20,000, so it’s important I get this right.
- I live in the US, so maybe you want to write me a check. So, how do I know the check will clear? Maybe you don’t have the funds to cover it. Maybe you’re presenting a stolen check, or claiming you’re somebody you’re not. Maybe the money is in your account but you’re going to cancel the check on Monday, claiming you noticed it was missing from your checkbook. I don’t know you, and — no offense — you don’t look all that trustworthy. Maybe I’m willing to deposit the check and give you the car title in 10 business days once I know it’s cleared. Suddenly I don’t look all that trustworthy, do I?
- It’s possible you have a cashier’s check from your bank for $18,000 (the price you wanted to pay) and you’ve got $2,000 in hundred dollar bills. Again: I don’t receive many bank checks, and I can’t identify a real one. Hell, I’m not even sure I could identify a fake $100 bill. And besides, your mullet is throwing me off.
- What if you are paying cash? Same problem — do I trust that the bills are legitimate? Did I think ahead to bring a way of testing them that is close enough to 100% effective that I can trust it? I can buy a pen to detect counterfeits for $4 from Amazon — is that enough to insure $20,000 in cash is real? I mean, it’s not like I receive a lot of cash in my daily life any more, so this isn’t a problem I’m used to dealing with. And $20,000 is a lot of money to me. If I’m wrong and it’s counterfeit, how I can prove that’s the money you paid me, rather than counterfeit that I say you paid me?
Really, the only way to make this work and know I’m not getting ripped off is to head to your bank, withdraw the money there (or have them write the bank check while we wait) and sign the title over as we hand over the money. We do this because we both trust the bank, and if the money they hand me is counterfeit I have options to resolve the problem.
But it’s the weekend, and your bank isn’t open, and we both want to sell the car now. We need a trust-less solution.
Pay me in silver or gold instead?
Well, using the current precious metals prices, you could instead pay me in:
- 723.32 troy ounces of silver, or
- 10.56 troy ounces of gold
These aren’t necessarily divisible, but let’s assume we reach a happy medium that’s about equal to $20,000 of US Dollars. We know there is some really good fake bullion out there, and we will also assume we have access to a trustworthy precious metals tester. Are we really going to test 700+ one ounce silver coins? I mean, that’s nearly 22 kilograms. Maybe you’re trading kilo bars so we only need to test 22 bars plus a few single ounce coins, but that’s still 50 lbs of metal we need to verify and hand over (that you needed to bring to the meet.)
Maybe I take 10 ounces of gold and 30 ounces of silver, so I “only” need to test 40 coins. That’s possible, I suppose, if you were walking around with a bag full of precious metals.
It’s still not that practical in today’s world, though. That’s why paper money was invented in the first place — as deposit certificates that could be redeemed for precious metals but were much more convenient.
Now, buy my car with a distributed ledger
We agree on the $20,000 price, and you pay me using Kinesis or another digital currency.
- I give you my wallet address, probably on a mobile phone as a QR code.
- You scan my QR code and send me gold (KAU) or silver (KAG). There’s a $90 transaction fee that we need to figure out, but I think it’s fair that we just split it, so you send the correct payment amount.
- I check my Kinesis (or hardware) wallet and see that the distributed ledger shows the transaction a couple of seconds after you send the payment. I know that once it’s on the distributed ledger it’s irrevocable so you can’t back out of it later. I know I’ve been paid in full.
- I sign the title, shake your hand, and look for a ride back home.
Instant, verifiable, irrevocable payment is what the blockchain and distributed ledgers allow using the power of math, cryptography, and the Internet. Kinesis just ties that into the most stable stores of wealth known to man – precious metals.
Maybe convenience and trust-less transactions aren’t convincing, though. I’ve got another reason:
The big reason to embrace the blockchain: YIELD
That $90 in fees we sent in our hypothetical transaction? If we used Kinesis, $47.25 of that goes back to the users of the system in the form of yields.
You don’t pay a fee to have your gold and silver stored, audited, and insured — 17.5% of the total fees Kinesis generates pay that. Instead you get a yield on your money — every month your gold grows a little bit, and your silver grows a little bit — how much depends on how many transactions happen during that month. 15% of the total fee pool is divided among everyone who holds KAU or KAG in their accounts, proportionally.
If you minted that $20,000 you paid me (really, that would be 330.6878 KAU or 711.4906 KAG), then when you paid me those tokens went into “activation,” and they no longer count for your holder’s yield (because I’m holding them now), but they qualify for your minter’s yield, forever. 5% of the fees the coins you minted generate are paid back to you every month. Forever.
You get paid to spend your KAU and KAG instead of just sitting on it. Actually, you get paid to sit on your KAU and KAG too. Because of the blockchain and its ability to automatically calculate fees for every transaction and set it aside to be used as a yield. This is something physical gold and silver just can’t do.
Remember: Kinesis works for everyday purchases too
For a 0.22% fee you can load a Kinesis VISA debit card and spend your gold and silver pretty much anywhere in the world, and nobody will look at you funny or ask if that’s a real coin or not. When you spend on your debit card, assuming you minted the KAU or KAG first, that money you spend goes into activation and you get a minter’s yield as well. So that ridiculously priced coffee pays you back a little bit every month for the rest of your life, making the cost a little more justifiable.