New Gold Backed Cryptocurrency Has Been Announced

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Our grid depends on this mineral

gold bullion

The most legitimate argument against Bitcoin, is the fact that it isn’t backed by anything tangible. While it does use math and cryptography to create scarcity, at the end of the day bitcoins are still just digits on a screen. In that regard, they’re aren’t that different from fiat currencies. Their value is dictated by confidence and belief, rather than real world value.

But that may be about to change. Not for bitcoin, but for digital currencies in general. The gold storage company known as Anthem Vault has decided to release a new cryptocurrency that is backed by precious metals. Each “coin” will be valued at 1 gram of gold, and will be called the “Hayek,” after Austrian Economist Friedrich Hayek. It’s slated to be released on May 25th.

In an interview with Business Insider, the CEO of Anthem Vault explained his reasoning behind creating the currency.

One use case for the Hayek coin, says Blanchard, is an alternative payment system for people in developing countries with volatile currencies. They could pay each other with the equivalent value of gold, if they each had Hayek coin wallets.

The other use case, he said, is if there is a massive distributed denial of service attack on the modern financial system.

“Talking with friends of mine in the intelligence agencies, they say this is a real threat,” he said. An attacker (he used the Russians as an example), “could create a massive DDoS attack, make the [financial] system inoperable. Ultimately this is how we rely on our payments.”

If a big attack hit the computers that clear payments in the banking system, people would be unable to pay for things. Bitcoin and other cryptocurrencies based on the same technology don’t work like that. There’s a decentralized system of confirming that a payment has been made, so systemic failure is (almost) theoretically impossible.

Basically, this will be an alternative to the volatility and vulnerability of central bank issued currencies. It has the added advantage of making precious metals more versatile on the global marketplace, since physical delivery is not required.

But that brings up a troubling issue. It’s nice not having to take a delivery for every transaction, but it would also be comforting to know that you could take a delivery for physical gold if you wanted to. After all, is a currency truly backed by gold if you can’t have the gold?

So far, Anthem Vault has yet to say whether or not you’ll be able to cash in your digital coins for gold. If they did, it would create a system of checks and balances between themselves and the customer. They would have to keep a large amount of gold on hand, or else their currency will be worthless if too many people withdraw.

But if you can’t exchange your coins for a real world product, then their currency is no better than paper gold. It’s just too tempting to say that you have the gold in a warehouse somewhere while issuing as many digital coins as you want. And that brings up another question.

We don’t know if their cryptocurrency will allow them to add new coins. It would make sense if they could. What if people bought so many coins that they were worth more than the gold they have stored? You would have to issue more coins to make sure the currency has an accurate value. But if people can’t exchange the coins for real gold, then they have the option to rake in the cash while issuing as many worthless digits as they like.

So if you’re a gold or cryptocurrency enthusiast, I’d hold off on this for now. It might turn out to be a great idea, but until all the facts are in, it’s a little too risky for my taste.

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Contributed by Joshua Krause of The Daily Sheeple.

Joshua Krause is a reporter, writer and researcher at The Daily Sheeple. He was born and raised in the Bay Area and is a freelance writer and author. You can follow Joshua’s reports at Facebook or on his personal Twitter. Joshua’s website is Strange Danger .

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  • http://www.shitsenders.com Я0llyJ0g3r

    It was only a matter of time. I don’t like the fact that you have to trust somebody again because I just don’t trust people. Cool concept though.

  • http://www.dontflyoverwater.com FreddyIsTheDevil

    Selma !

  • casimcea

    And this gold is going to be stored where?

    • http://www.dontflyoverwater.com FreddyIsTheDevil

      Selma Hayek’s garage

  • Gearmoe

    If you can’t acquire the gold it’s no different.

  • unbubbleslayr

    What is the energy value of a bitcoin? Computers mine the bits so maybe the electricity. Can’t be worth much.

    • http://www.shitsenders.com Я0llyJ0g3r

      What is the energy value of the dollar? Printing machines print the paper so maybe electricity. Can’t be worth much, after all, it’s just paper! In essence, bitcoin is backed by cryptographic security and decentralization instead of the classic precious metals and war machine so it’s not as appealing to those that are ignorant on the topic, naturally. Bitcoins are quite expensive and energy demanding to mine, often times the best economical way to get into bitcoin mining is to rent space on the equipment as the average person wouldn’t be able to afford it on their own and make any money at it. No single, devious, money grubbing group of people can jump in and take over bitcoin and start “printing” bticoin for all of their friends and their black projects and the fake stock market, that’s what attracts me to crypto currencies. In time more will understand, they probably won’t have much of a choice if they still want to be somewhat free and the more that start using it the better it gets for people like me who saw it ahead of time.

      • unbubbleslayr

        The energy value of the dollar is just pennies and that is why it’s dropping in value , but what is the energy value of bitcoin?

        • http://www.shitsenders.com Я0llyJ0g3r

          Bitcoin Miners Are Racking Up $150,000 A Day In Power Consumption Alone: techcrunch.com/2013/04/13/the-cost-of-a-bitcoin/ – you have to bring your mind into a new area with bitcoin. It’s not energy value etc, it’s cryptocraphic strength/
          decentralization. It’s 8 decimal places instead of 2. It’s instant with very low transfer fees. You can use a brain wallet and not have to physically possess anything to get to it. The technology itself is going to be borrowed from for future anti-spying programs. Decentralized websites, email, etc. Decentralization is key with our food, technology and governments if we want to have a non-slave future.

          • unbubbleslayr

            Revenue per day is “$470,00”. Current value of a bit coin is $237, and apparently that equates to 1983 bitcoins mined per day, so the approximate energy value is $75 per bit coin. So people are paying $237 for something worth $75, of course sellers want a profit so there will be a markup ($162). Seems reasonable, but not a bargain compared to silver which could be a negative energy value.

          • http://www.shitsenders.com Я0llyJ0g3r

            Commodity thinking, nothing wrong with that. I am very favorable to silver also. You’re missing the mathematics, finite amount, and, again, the cryptographic strength and decentralization which commodities do not have. I wouldn’t store huge amounts of wealth over along period of time with bitcoin because you could lose out but it has it’s time and place to be used. I’m not all bitcoin, it’s a very small thing that I do but it seems to require the most explanation to the masses so that’s why you see me talk about it a lot. Thanks for the equation, didn’t know to calculate it that way.

  • Joe Lizak

    Currency backed by gold is just great. As long as you own most of the gold.
    Hayek? Sounds like what a Jew says when he sneezes.

    • Mark

      Exactly so! “…since physical delivery is not required”—Same gonifs, different day, different name… now it’s “Austrian” economics. What a crock.

      • http://www.shitsenders.com Я0llyJ0g3r

        I’m sticking with bitcoin.

  • carolouise

    There is already a company that offers an alternative currency, out of Germany. It is a card with an ACTUAL GRAM of GOLD in the center, and it can be used in 123 countries to buy goods and services from K-Exchange Centers, which are stores which accept the gold cards as money. Find out more here: http://gramsgold.weebly.com/

  • Ed

    Why should I trust “Anthem Vault”?

  • abinico

    If you can’t get the gold then it is not backed by gold – it is a scam.

  • Box

    Problem is, this is exactly how the Rothschilds started, by issuing a receipt for your gold, then you used the receipts for payments which became paper currency. Then Rothschild began lending 2X, 3X 10X the value of the customers’ gold deposits and then the world went straight to hell. Its the same thing again, the Hayek becomes the modern Rothschild gold receipt and here we go again. Oh man….Anyway as a USD killer it may work, and also it could encourage Russia and China to speed up plans to back their currencies too. USA doesnt have enough physical metal to back the inflated USD so it will die, I suppose. Thank Henry Kissinger for that.