1. The main problem of fiat based cryptos
The most famous and popular cryptos (btc, eth, etc.) are based on fiat money (see [1]). Even the title of the famous paper has the following meaning: “bitcoin is a digitized on blockchain fiat currency”.
Here is the famous paper https://bitcoin.org/bitcoin.pdf"
Let us look on the title “Bitcoin: A Peer-to-Peer Electronic Cash System”. Cash means -fiat currency. Electronic cash means -digitized fiat currency. Peer-to-peer system means -blockchain. If we put all pieces of the puzzle together then we get that bitcoin is a digitized on blockchain fiat currency. In other words, all cryptos (over 27 thousands), which are not backed by hard assets (gold, etc.) are FIAT money in a digital form. For this reason, they can not be a hedge against inflation of other fiat money (in variety of different forms).
People buy cryptocurrencies using fiat currencies and wait for their price to rise. They will be disappointed, because when cryptos reach millions in fiat money these millions will be worthless, like in Germany during hyperinflation on in Zimbabwe (when many people had useless millions). Think about a crypto coin as a bag with fiat money. The amount of money in the bag is equal to the price of this coin. The higher the price, the more fiat money is in the bag. But, when fiat money are useless (hyper inflated) it does not matter what amount of useless fiat money is in the bag. Therefore, it does not matter if bitcoin price will be million or billion in fiat money if fiat money will be useless.
Only cryptos backed by hard assets (gold, etc.) will preserve wealth, because if you redeem gold backed crypto on physical gold you will have the physical entity (gold) with intrinsic values, which can not be inflated to zero as fiat currencies. See [7] on historical performance of gold during long periods of inflation.
2. Advantages of gold backed cryptos over physical gold
The first obvious advantage of gold backed cryptos over physical gold is portability/transportability. You do not need to take with you bags with gold when you are moving, relocating, or traveling.
The second obvious advantage of gold backed cryptos over physical gold is a speed of conversion to fiat or other crypto currencies.
The third advantage of gold backed cryptos over physical gold is availability of two ways to increase wealth. The first way is from appreciation of gold over inflated fiat currencies. The second way is from profitable trading during speculative bursts (see [2]).
3. Disadvantages of gold backed cryptos over physical gold
The first disadvantage is a counter party risk. This is a risk that the counter party will not deliver gold to you.
The second disadvantage is a technological risk. This is a risk that due to an error, malfunction, etc. some or all of your cryptos will disappear and then you will not be able to redeem them to real physical gold.
4. Collypto crypto
In this post we look at Collypto flatcoin ( https://collypto.com/ ). On the official website, it is stated:
“Collypto is a blockchain tradable flatcoin collateralized using a tokenized index of real estate and commodities. As a flatcoin, its purpose is to preserve purchasing power, allowing users to take control and ownership of their value.
Collypto minimizes the speculative risk associated with traditional cryptocurrencies by basing its value on assets that represent and preserve real-world purchasing power. It is “pegged” to value, rather than the price of a secondary currency, security, or commodity. It is designed to actively resist fluctuations in its value due to short-term news cycles, and superficial market trends
Unlike stablecoins, which allow inflation to erode your value, Collypto preserves your purchasing power over time. With Collypto, you have the peace of mind in knowing that you can buy the same things on Wednesday that you could have on Monday, regardless of what happens on Tuesday.
Collypto Credits are 100% collateralized to guarantee solvency and ensure that purchasing power remains consistent, even as the market prices of goods and services fluctuate. We collateralize credits using publicly traded financial instruments that represent aggregate consumption, so that you can have the confidence that your value rests securely in tangible assets, rather than pure speculation.
Collypto is the world’s first cryptocurrency to offer systematic recourse in the event of theft or fraud. The Collypto blockchain implementation provides state-of-the-art protections and features that are not available in any other cryptocurrency in existence.
Accidents happen. The unforgiving nature of accidents during blockchain transactions is often regarded as an unacceptable risk and serves as a deterrent for many who would otherwise embrace cryptocurrencies. Collypto mitigates that risk. Whether it is mistyping an address, forgetting a seed phrase, or losing a hardware wallet, Collypto users have peace of mind in knowing that mechanisms are in place to recover lost credits.”
5. Red flags
A) Not responded to my request
On June 22, 2024 I had sent them request with questions.
I have not received any response, as of today.
B) Not ready for post quantum era
The majority of credible experts made public statements that the Q-day is very close (see [3-5]).
I have not found on https://collypto.com/ site any document which gives answers on the following important questions:
1) Which post-quantum encryption algorithms will be used to secure their post-quantum blockchain?
2) When the post-quantum blockchain will be operational?
There are no answers on these questions on Collypto website. All blockchains which will not be ready for post quantum era before the Q-day will disappear after the Q-day.
C) Composition of the index is based on historical performance
To find the composition of the index they fitted different baskets to historical data (see [8]). This means that the index did protected against inflation on historical data, but for the reason that our future always is different from the past, there is no guaranty that the index will protect against inflation in the future.
D) Not possible to redeem the flatcoin to hard assets
The flatcoin index is not directly based on hard assets, which can be redeemable, but on ETFs investing in these assets. For this reason, the flatcoin -collypto is a digitized on blockchain fiat currency with the price based and indexed on a basket of ETFs (43% -real estate, 19% -food, 12% -energy, 10% -precious metals, 16% -materials).
References:
[4] https://www.financialexpress.com/opinion/the-quantum-race-quantum-day-2025-has-ignited-a-global-race-reshaping-computing-and-cybersecurity/3399085/#:~:text=Projected%20for%20as%20early%20as,data%20transmitted%20on%20public%20networks
[5] https://dynpass.online/pqc.html
[6] https://blockchain.news/news/vitalik-buterin-proposes-a-quantum-resistant-hard-fork-for-ethereum-
[7] https://www.youtube.com/watch?v=NpNhXl714gk
[8] https://collypto.com/wp-content/uploads/collypto-whitepaper.pdf
