So Terra, a stablecoin, just did this:
And now we’re seeing fluctuations in Tether.
In a year when…
- BTC is down 38%
- Nasdaq is down 28%
- The S&P is down nearly 20%
- Inflation is reportedly at 8.5% in the US, but calculating the CPI as it was done in the 1980’s comes up with a number closer to 17.3%
- Global supply chains are broken, and we are likely to see food shortages before the year is over
- Lots of world leaders seem to think open conflict with the nation with the largest inventory of nuclear weapons is a great idea
…you may be more concerned with return of assets than the return on your assets. What do you do if you think now might be the time to pull out of the crypto market and wait for a good time to re-enter? If you go to cash then you’ve got inflation concerns. If you move out of crypto and into Tether then that might drop faster than Terra just did. If you’re moving into equity markets right now you’re trying to catch a falling knife (and with the VIX in the mid-thirties and possibly hitting 40 soon you’re probably gonna get cut). What do you do if you just want to protect the wealth you’ve earned?
Precious metals on the blockchain
Yes, I said it. Boomer Rocks on the blockchain. Specifically Kinesis. Here’s why this unconventional idea actually makes sense.
BTC is acting like a risk-On asset
Maybe BTC is the Pristine Asset that Raul Pal talks about, and is better than gold – I doubt it, but maybe it is – right now, with the way markets are traded, BTC seems to be traded as a leveraged bet on the Nasdaq. Until that linkage is broken I think you’re more likely to see big money pushing BTC down to hedge other market positions as equities continue to decline.
That’s not to say gold is doing great, but it’s uncorrelated with the markets, as opposed to BTC’s correlation that is closer to 0.7. Since the beginning of the year:
- BTC is down 36.84%
- Gold is up 0.31%
If you’d converted your BTC holdings into gold on January 1st you’d be doing 37% better than if you’d simply HODLed. If you are bored by gold and care for nothing other than BTC, then if you’d made this move in January you could now rotate back into BTC and you’d have 36% more BTC than you do now. If BTC continues lower as the Fed deliberately pops the stock market bubble this will be even greater later.
Gold retains it value
There are swings of course – like during the Weimar inflation where $100 (4.84 ounces of gold) would buy a mansion in Berlin – but over the long haul gold and silver have always retained their value.
Even if you bought in at the peaks, if you’d held on you’d be OK now. Gold has never, in its 5,000 year history, gone to zero. Unlike every fiat currency man has ever tried.
It doesn’t matter where you bought gold on that chart (or any chart of gold, really) – even if you only bought at every peak, had you held, you’d have made money. You wouldn’t have made as much money as you might have if you’d been a smart investor in stocks, or bonds, or crypto, but when the goal is losing as little as possible, gold starts to look pretty amazing.
Note that I said retains – we are talking about retention of purchasing power over the long term. While gold’s purchasing power can be expected to spike in times of extreme financial stress, and dip when other asset classes look more inviting, for the most part gold acts like a store of value – you know, what “money” is supposed to do – It will not be headed ‘to da moon!!! 🚀🚀🚀’.
Moving digital assets into gold
Kinesis runs on a fork of Stellar that has been tweaked to perform as the base of a new gold- and silver-backed monetary system. It’s very fast, and reliable, but that means that at present Kinesis coins aren’t something you can purchase on big exchanges like you’re used to. To move to KAG you’ll need to open an account with Kinesis then transfer in your digital assets. (See one page down for natively supported coins.)
If you convert one BTC into Kinesis KAU today then you’ve converted it into 492.5 grams of redeemable gold that is legally titled to you and stored in one of 12 vaults across 8 countries:
- Hold onto it and receive a yield (generated from trade/transfer fees of 22 to 45 basis points – the gold never moves and is never at risk by being loaned out or anything)
- Get it redeemed and delivered to you anywhere in the world 100 grams at a time (as 100 gram bars are the smallest deliverable quantity). The bars you get will ship from the closest vault and you’ll have no say over brand.
- Spend it on a debit card in the real world – just note that the current debit card provider isn’t online yet, and we expect the new card to come online next month
- Transfer it to others or cash out as you can with any crypto, or trade into any of the other cryptocurrencies Kinesis supports when it’s time to re-enter the markets:
Real Money. Real Wealth. Not Speculation.
You won’t buy a gram of gold on the blockchain and see it go up in purchasing power 2,000% as you might with a crypto project. But gold has never gone to zero either. Moving to Kinesis means choosing to move into real assets until it’s time to move back into the markets again.
There are some downsides though:
- You won’t be anonymous. You need to complete KYC requirements to participate in the most compelling aspects of the Kinesis monetary system. If you’re a Russian Oligarch, you’re probably out of luck right now.
- Every transfer costs a fee – that’s what funds yields. Converting your BTC to KAU at the Kinesis Exchange costs 0.22% as do all exchange transactions. Moving back to BTC later costs another 0.22% (hopefully the yields you receive will mean you actually made money in the interim).
- If you want to send your KAU to an offline wallet, then you’ll not only pay a transfer fee (0.45% each way for wallet-to-wallet transfers), but the only offline wallet that currently supports the Kinesis blockchain is the Coolwallet S.
Kinesis is working on a big vision – they’ve proven they can deliver a yield on gold and silver without loans or leases; they have built a blockchain (forked from Stellar) that can handle 2-3 second transaction times while handling more transactions per second than VISA’s annual average; Kinesis is working with large partners like Indonesia to have Kinesis accepted as a banking/transfer solution for the world’s under-banked. Kinesis is working on being a gold- and silver-backed monetary system.
Wanna know more?
You can sign up for Kinesis here. If you use that link you’ll get a half-ounce of silver (0.5 KAG) free once you complete your KYC. The rest of this site is dedicated to the project if you’d like to know a bit more, so feel free to poke around.