Precious metals and Blockchain

[JakePMs]

Hey all, 

I was watching this podcast yesterday as I'm interested in sound money (now more than ever with the central bank rates).
I'd previously had no interest in silver or gold on the blockchain, almost seems less trustworthy than paper ETFS! 
But the chap in this podcast (Jim) who is a pretty serious stacker from what I can tell seemed quite supportive of the idea and said it's actually better as a product vs ETFs...

Has anyone thought about these sorts of solutions as an alternative to ETFs and could you recommend me some?

Cheers,
Jake

 

 

[ChrisSilver]

I’ve put this topic in the Precious Metals section for the moment.

Depending on how the topic develops it may later be moved to the cryptocurrency section of the forum, depending on which area is more relevant for this topic. 

[Bigmarc]

4 hours ago, JakePMs said:

Hey all, 

I was watching this podcast yesterday as I'm interested in sound money (now more than ever with the central bank rates).
I'd previously had no interest in silver or gold on the blockchain, almost seems less trustworthy than paper ETFS! 
But the chap in this podcast (Jim) who is a pretty serious stacker from what I can tell seemed quite supportive of the idea and said it's actually better as a product vs ETFs...

Has anyone thought about these sorts of solutions as an alternative to ETFs and could you recommend me some?

Cheers,
Jake

 

 

I did look at a few but all seem to have hidden costs that have not much improvement on buying physical. 

One area that did interest me was where miners themselves were using Blockchain as an investment platform such as https://aabbgoldtoken.com/about-us/

In all honesty I think it is very early days and probably have to wait for our friends across the pond to come up with a set of standards and legislation. I think this is the only way any sort of mass adoption or protection on your investment will happen.

[silenceissilver]

I don't see the point of gold and silver "on the blockchain" and I do have crypto currencies. Both precious metals and crypto currencies (and cash) have the advantage that you don't need a third party to store it for you and you don't need a middle man to pass it on to someone else. That's the whole idea of crypto currencies, to be able to do this also with electronic payments. The advantage of precious metals is, they don't have an electronic trail, at least if you buy them not online but with cash (and if you are not asked to provide your details because of some government rules). Because for most crypto currencies, all payments are visible to the whole world (e.g. for Bitcoin) - privacy coins are the exception, unless someone cracks their encryption, a risk that doesn't exist for precious metals obviously, but on the other hand, cryptos are easier to transfer over distance.

So both have their advantages and disadvantages and the idea of trying to combine the advantages of both is very intriguing indeed - and indeed there are crypto currencies copying the price of gold or silver - but that doesn't mean they are backed by them but rather they have some other form of electronic backing - which can work of course - but it can also fail miserably, as Terra Luna has shown. If you wanted to back a crypto currency with gold, you'd need to introduce a trusted central authority - which would take away the advantage of both precious metals and crypto currencies (and cash), you hold yourself. I don't see a decentralised version possible - like "OK, here in my home, I put an ounce of gold into this bucket which we call the market and get a gold backed crypto currency instead or the other way round - I mean maybe, if instead of putting it into a bucket, you'd send it directly per post to someone who'd send you the crypto in return and if you had a kind of atomic swap, holding the crypto currency till the gold is received - but even then - if someone received the gold and just didn't confirm it, the counterpart could do nothing to get his crypto currency, unless their was an automatic way of confirming the receipt of the gold - and the automatic authentication of it being real gold. In short - there is no realistic way to combine the strengths of both and in case I'm wrong and things change in the future, it's certainly still a very long way to go - but more likely it's principally impossible in a feasible way. For sure, there is not meaningful combination of these two asset classes, in the present. As said, I do have crypto currencies and gold and silver of course but I'd never touch a "gold backed" crypto currency - because it's pointless and introduces risks that you don't have with precious metals or crypto currencies alone.

[Petra]

I don’t do cryptocurrency, but surely there must be a third party? How are you going to use it, cash in etc. ? What if you have no internet?

[silenceissilver]

33 minutes ago, Petra said:

I don’t do cryptocurrency, but surely there must be a third party? How are you going to use it, cash in etc. ? What if you have no internet?

The whole idea is that the ledger that usually the bank holds, about all their customers' accounts and their transactions, is shared on umpteen copies,  thus on the blockchain of which everyone can have a copy on their laptop from which ensues you have to have a mechanism against cheating and getting an agreement of new transfers on all copies which has been resolved (but certainly can be and constantly is improved), without going into any details. The problem is that then everyone sees all of everyone else's transactions (as soon as you can build a link between a wallet (=what would be your account, if it was a bank) and a specific human which you can all the more easily, the more links you already have) unless the ledger on the blockchain itself is also encrypted and hides all information about who sends what to whom and how much (which is the case for privacy coins (e.g. Monero), so only for a tiny fraction of all crypto currencies, not including Bitcoin which therefore is a surveillance sh.tcoin). (The "crypto" as in cryptography in Bitcoin and all the other non-privacy coins comes from the mechanism of how to restrict what's in your wallet to your and only your access etc.). Of course when you cash in, you need a third party because you are dealing with centralised fiat, at this point. But you don't need a third party if you directly use it, e.g. sending it to an online provider of whatever. As a matter of fact, I would love if all the big precious metal dealers in the UK would offer Monero (or another privacy coin) as means of payment. I have only found one in Switzerland, at a quick glance and I don't even know if they are a serious dealer or scammers. Any feedback would be highly welcome:

https://www.suissegold.eu/en/category/buy-gold-coins/2022-gold-coins

The fact that they have 2 weeks for delivery, suggests they are short selling it and only ordering from a retailer, once they get an order, in my view.

Edited June 8, 2022 by silenceissilver