Making Gold Ownership For Everyone With the Blockchain | Terence Zimwara
Gold is a highly sought after precious metal, with both ordinary people and governments vying to get their hands on it.
Logically, it should be available to everyone since it also occurs naturally yet the reality is that only a few can possess this resource.
Governments and those in privileged positions dominate the global gold market while an average person faces barriers that are specifically created to keep him out.
Some resource-rich countries often impose restrictions or legislate on who gets to buy or store gold and in what quantities. For example, the South Africa government imposes restrictions of who must own or buy such minerals as gold.
Who owns the gold
While the logic for the controls is sometimes justified, it would seem, however, that the laws or regulations unfairly disadvantage ordinary folks. The so-called foreign investors or the wealthy are not unduly restrained by such regulations it would seem.
Meanwhile, in Zimbabwe, the government has made one institution the sole buyer of gold. Accordingly, anyone caught violating this policy risks serving jail time. However, monopolizing ownership has unintended consequences, the proliferation of black market and smuggling cartels.
Still, authorities regularly enforce this policy by raiding illegal mines and arresting unlicensed buyers. The message is clear in both instances, an average person cannot or should not possess gold!
However, the question still stands, why do people seek to possess gold or any other precious metal for that matter?
Well, it seems demand for gold stems from its consistent ability to outperform currencies and stocks. Gold has a finite supply and cannot be copied. Gold is acquired through an expensive extraction process that cannot be avoided.
It is this knowledge that breeds confidence in the metal. This is in turn gives it the value it has today.
It is the same confidence that had countries backing their currencies with gold in the first place. This of course changed in 1971 when then United States president, Richard Nixon triggered a global abandonment of this system.
Why the gold option
Yet, over the years, the fiat currency system has developed own problems. The problems only make the initial decision to dump the gold standard look very unwise.
At the core of the problem is the sometimes unbridled reliance on printing of money to solve problems. Such creation of money hurts confidence but it appears there is no end stopping. Just recently, governments across the world created money to boost economies hurting from the effects of the global pandemic.
Naturally, this has a negative impact on the value of currency in the long term.
So logically, possession of gold is partly a way to shield individual or national wealth from inflation and currency depreciation. However, this option is more often available to nation-states than individuals as history will attest.
For instance, in the world’s s richest country, the United States only 12% of the population reportedly owns gold. A combination of factors is stopping Americans from possessing the precious even as they have the wherewithal to do so.
This figure is even worse in poorer countries where most of the wealth is concentrated on a small clique of powerful individuals.
Barriers to gold ownership
So what are the barriers that stop even those with means from possessing this?
Well, there are many barriers seemingly created to ensure that only a small clique will always have this privilege.
The barriers come in many forms and they include high premiums, the logistics of moving physical gold and the costs of storing it.
In addition to facing legal restrictions, an average person’s ignorance and lack of education or knowledge (about the metal) means they will not prioritize possession of this commodity.
Indeed, great strides have been made in trying to change this and help make the precious available to masses. Financial instruments like digital gold electronic traded funds (ETFs) have been created.
Yet even that is held back by the necessary but equally cumbersome know your customer (KYC) and anti-money laundering (AML) processes.
Furthermore, centralized exchanges dealing with such funds only cater to professional traders and institutional clients. Stock markets are just too complicated for the average person.
The blockchain changing the story
However, things are changing now. The emergence of the blockchain technology might just prove pivotal to those seeking to possess the metal without worrying about the obstacles highlighted above.
For example, Meld Gold, an Australian start-up which recently partnered with Algorand, says it has created a decentralized gold token.
According to Meld Gold, the digital platform delivers secure, seamless access to the acquisition of gold. This allows investors or buyers to transact in real-time, reducing the volatility and risks traditionally associated with the procurement of gold.
Furthermore, the platform removes inefficiencies, increases accessibility and stabilizes the acquisition and ownership of the world’s oldest currency.
Meld Gold is leveraging Algorand’s open-source, proof of stake protocol to deliver gold that is traceable, fungible, transactable, transferable and redeemable. Meld Gold chose the Algorand platform because it required a technology that allowed for enterprise-scale to be built without sacrificing performance or security.
Given the dynamics of Meld (a Digital Gold Certificate), additional Algorand features and functionality marry directly to Meld’s core proposition.
These include estate protocol capabilities, flexibility in fee structures, high liquidity management, the delivery of dividends and the provision of targeted incentives to our partner network.
Meld Gold is just one of the many start-ups that are attempting to resuscitate gold as currency using the blockchain technology.
What the future holds
These companies believe the dream to democratize gold may have taken a step closer to becoming a reality because of the blockchain.
In the very near future, citizens in hyperinflation hit countries like Venezuela and Zimbabwe will have a better chance of protecting their wealth with gold tokens.
Through the blockchain technology, an opportunity now exists to convert even meagre savings into gold without worrying about vaults or securing legal documents needed to possess this metal.
This is unprecedented and it is happening.
Terence Zimwara is a blockchain enthusiast and an Ambassador with Algorand Foundation, a technology company behind the world’s first scalable and decentralized blockchain that is based on pure proof of stake consensus. The Foundation offers funding across application development, tools & infrastructure, research, and education & community. You can contact him on Whatsapp 263 771 799 901 or firstname.lastname@example.org
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