This whole site is about Kinesis, but this is designed to be a much shorter introduction for a more traditional audience.
The Financial Status Quo
As of 2021, cash is involved in only 11% of transactions in the US. This year 21% of purchases are expected to take place online, and that’s expected to reach 24% by 2026.
Basically, digital forms of payment dominate right now, and they are essential for a quarter of our consumer economy. They aren’t going away, either. Most people prefer paying with ‘plastic,” and the trend toward buying from online retailers doesn’t look to be changing any time soon.
This is an impediment for those who think the world would be a better place if we could get away from fiat currencies and return to Sound Money – even if we could get everyone to agree that an ounce of silver should be a valid alternative to bank notes, you can’t pay for online purchases with that hunk of metal.
Kinesis as Sound Money you can use today
Kinesis, essentially, is an attempt to return to gold- and silver-backed currencies that have preserved purchasing power across time. Their approach is to take this oldest form of money (precious metals) and tie it in with the newest form of money (blockchain). Don’t zone out – I’ll cover these topics in later articles, but at its heart Kinesis is physical gold and silver, legally titled to you at all times, that you can spend in our modern digital economy. That’s it.
There are a few components here:
- Kinesis holds your gold and silver in insured vaults.
- Ownership of the metal is tracked on a blockchain. When I pay you an ounce of silver in Kinesis you’re receiving 1 KAU. That KAU is title to one ounce of silver in the Kinesis’ vaulting network. As the holder of that metal, you will receive holder’s yield on it, you can spend it on a debit card (in 61 countries not including the USA at present), you can spent it on a voucher in the US and earn an immediate 3% back, you can sent it to other Kinesis users as payment, you can use it to buy physical gold and silver coins or bars at the Kinesis Bullion store, or you can have it delivered (minimum 200 ounces of silver or 100 grams of gold at a time).
- Use of the blockchain means a couple of things. First, you’ll know you’ve been paid in about 3 seconds. Second, the blockchain assessed me a fee as part of the transfer – you received 1 KAU, but I paid 1.0045 KAU to get it to you. Since silver is trading at $22 right now, I would have paid you $22, and it would have cost me about a dime to send it to you.
- That 9.9¢ fee I paid goes into something called the “master fee pool,’ which will be redistributed as yields next month. 57.5% of yields go back to users of the system, with the rest reserved for Kinesis and partners.
So where does Kinesis fit in to the financial system?
For me, I see Kinesis in a few roles:
- As a supplement to my stack. Gold and silver that is in my possession has a value that’s unrivaled by other assets – it’s always had value and always will, it’s portable, it’s anonymous, being targeted by my government doesn’t diminish my stack’s value, and it doesn’t depend on electricity or the Internet. My stack isn’t going away, but I want to own more gold and silver than I’m willing to store in my own possession. For that additional amount I need a commercial vault that can be insured, and Kinesis makes a ton of sense versus a traditional vaulting company. Metal in Kinesis pays me via yields rather than requiring storage fees, and should I need to liquidate it in an emergency to pay for a new transmission I can do so easily, and within a percent of spot rather than whatever the coin dealer will give me when he sees I’m desperate.
- As a replacement for PayPal/Venmo/Cashapp. The fees these services charge are extortionate compared to the fees in Kinesis, and in Kinesis I own my assets and it’s not legally an unsecured loan. I’d much rather store a portion of my spending money in gold/silver in Kinesis and use that for payments than use PayPal for anything. Likewise, I’d prefer to receive payment in gold rather than dollars.
- As a replacement for traditional banking. Kinesis isn’t there yet – I need a debit card in my jurisdiction, and some way to pay entities (like my county tax assessor) that currently only accept paper checks, and better ways to get money into the system, but someday I’d like to take my salary as gold paid into Kinesis, rather than Dollars paid into my bank.
Gold and silver are the original money – proven over time and unassailable as a store of value. But gold and silver no longer work as a medium of exchange, nor are whole ounces of metal practical as a unit of account. Without those three components you don’t have money.
Kinesis is gold and silver 2.0 – it makes physical metals usable in the modern economy, and it’s built in a way that my gold and silver earns a yield comparable to what savings accounts have traditionally offered, without the risks of loans or rehypothecation.
Kinesis has found a model that makes gold and silver into money again. It’s new, and it uses new technology that’s most associated with rampant speculation, but at it’s core it’s sound money, done right.