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 value, 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. Kinesis gold crypto
In this post we look at Kinesis GOLD. On the official website, it is stated: “Kinesis gold (KAU) is a digital currency. Each KAU is backed by one gram of fine gold stored in fully insured and audited vaults, in your name. KAU lets you spend, trade, send and earn physical gold, anywhere in the world.
Kinesis has partnered with Indonesian state-run national postal service, PTPos Indonesia, to introduce KAU as currency to the entire population of Indonesia. Alongside the partnership with PTPOS – the third-largest postal service in the world – Kinesis has partnered with the only two government-regulated exchanges in Indonesia: Jakarta Futures Exchange (JFX) and ICDX – to bring instant physical gold trading to the country via KAU.”
Kinesis Gold pays yield. The Holder’s yield is a passive yield earned on every single gram of gold (KAU) – and silver (KAG) – held with Kinesis. The yield will be paid monthly in gold and silver for as long as you hold your precious metals with us.
The Holder’s yield is calculated from a 15% share of Kinesis’ global transaction fee revenue, distributed among all the KAU and KAG holders in the Kinesis system.
They have a virtual card available in the UK, Europe, Canada, Australia, Oceania and Latin America.. The Kinesis Virtual Card works just like a regular debit card and can be used in the exact same way. With the Kinesis Virtual Card, you can spend and transact gold, silver and crypto online and in-store. You can spend gold, silver and crypto with instant conversion to local currency, at over 80 million online and physical locations, globally.
On their website there is a business address and contact info.
5. Red flags
A) High fees and charges
For the reason that they need a source to pay yields they have high fees.
The troy ounce is the equivalent of 31.1034768 grams. $76.43 per gram is equivalent to $2,377.238 for one troy once. This is the KAU price per troy ounce.
If we compare it with PAX GOLD and TETHER GOLD prices
we see that KAU price is the lowest. This means that Kinesis Gold has higher fees and charges than Pax Gold and Tether Gold. Such high fees may be justified, because they pay yields to holders from the total pool of fees and also to participants of Kinesis partner program (see 6).
B) Not aware about Q-day problem
On my e-mail with questions, I had received the following response:
C) 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://kinesis.money/gold/ 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 Kinesis Gold website and it seems they are not aware about this problem by judging their response. All blockchains which will not be ready for post quantum era before the Q-day will disappear after the Q-day.
D) Negative comments on social networks and internet forums
There are many negative comments about Kinesis on internet (see [8-10]). People accuse Kinesis in exaggerated or incorrect claims and aggressive marketing tactics. I also had observed that some negative comments were deleted from or moved to the end of search queries.
6. Kinesis Partners Program
The partner program will enable precious metals advocates, crypto traders and payment service providers to earn an income through new customer sign-ups and interactions on the Kinesis platform by inviting them using a unique referral link.
When a new user signs up using your unique referral link, you will be able to earn a percentage of the fees they create when generating trading volume on the Kinesis Exchange, spending, trading or minting.
References:
[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://www.reddit.com/r/Buttcoin/comments/11b55d7/so_have_you_heard_about_this_scam_called/
[9] https://cryptoinformer.substack.com/p/kinesis-money-due-diligence-and-libel
