Does the world really need more cryptocurrency? What if there was a new monetary system designed to overcome the severe price volatility which has made cryptocurrencies unappealing to use as tender for mainstream consumers — a digital currency pegged to gold rather than speculation?
The top three cryptocurrencies – bitcoin, ethereum and XRP – are all significantly off their record high prices, which were hit at the end of last year and beginning of 2018. Love them or hate them, they are part of our financial, investment and trading landscape – they have now gone mainstream, not least when Paris Hilton tweets her 16 million followers about her crypto investments.
With his father as his CFO and the backing of one of the world’s leading digital exchanges for precious metals – could Thomas Coughlin’s Kinesis Money be at the forefront of a new global monetary system? Is there a gap in the market for such a project?
The market reaction so far:
We have all known that ICO’s have been under a severe battering of late with several having been proven as scams and billions lost in gullible investor’s money. However, Kinesis Money claim to be different from the rest and have already had quite an impressive round of fund raising in what can only be described as torrid circumstances.
In fact, Kinesis Money ’s presale sold more than $55 million worth of KVT (Kinesis Velocity Tokens).
The public sale started on 10 September (ending mid March 2019) so far in total $58,061,000 (USD) – worth of KVTs (in total for pre sale and public sale combined)
The average ICO (initial coin offering) raises around $18 million with heavy marketing – Kinesis Money is quadrupling that, and has not gone mainstream yet with its marketing.
One more factor makes this a solid venture is that the infrastructure is fully developed.
Kinesis Money is fully operated by the Allocated Bullion Exchange (ABX), an institutional marketplace set up in 2011 for the trade of physical precious metals, gold and silver, being two of the most stable and definable stores of value, across seven global locations. For the benefit of Kinesis Money, ABX provides the comprehensive infrastructure with the advent of blockchain technology – and the introduction of cryptocurrencies. This gives it a firm advantage over other cryptos in the gold space which simply do not have this backing.
Thomas’ father, Michael Coughlin acts as the company’s CFO was previously awarded cadetship with the Australian Taxation Office in the early 70s. Michael is also ABX’s CFO and has a longstanding career steeped in accountancy and financial services.
We caught up with Thomas Coughlin to talk cryptocurrencies, the market and where he expects it to go from here.
You cannot do much with a kilo bar of gold that is stored in a vault somewhere. You cannot monetize it and or access the liquidity in terms of the sterling value that is represented.
According to Coughlin: “We saw the introduction of cryptocurrencies, and combining a traditional asset such as physical gold with a digital currency, as a great opportunity to return to being able to transact gold easily and efficiently – using it as a medium of exchange.”
An incentive to spend and trade – making it into a proper monetary system – rather than lying in a vault
To encourage users to send, spend and transact on the Kinesis Blockchain Network, Kinesis has introduced a multi-faceted yield system that remits the 0.45 per cent it takes on each transaction back out to the network – based on how they’ve participated.
For example, depositing physical gold into the Kinesis Vault Network via ABX, converting it into Kinesis currencies and then sending, spending or transacting it qualifies you for a minter yield, while others may get a depositer or holder yield.
According to Thomas: “These mechanisms are designed to bring metal into the Kinesis Monetary System and then get it moving, we don’t want to have something that people are just holding in the way we’ve seen with bitcoin.
We’ve developed this to facilitate trade.”
Kinesis Money opted to create a proprietary fork of the Stellar Blockchain Network to enable extremely fast transaction speeds and a truly scalable global monetary system. Meanwhile, the Kinesis debit card allows for instant conversation of Kinesis’s currencies into fiat currency anywhere in the world where Visa or Mastercard are accepted.
“Our goal is to create transaction velocity and trade volume – this will become the new ‘gold standard’ as we know it.
We’ve put gold and silver on to the blockchain to create cryptocurrencies that allow people to instantly and efficiently send value around the world.”
What do you believe are the main challenges for the crypto market at present?
“There are a number of problems faced by the crypto markets as of late. Cryptocurrencies experience high volatility which makes it difficult to rely on these currencies as steady investments. In addition to this, cryptocurrencies, for the most part, lack intrinsic value making it problematic to distinguish a fair price point.
Currently, they are simply slaves to the economic principles of supply and demand.
Coughlin explains that as a result of this, the majority of the cryptocurrency market cap is often wiped out overnight which only further highlights the use case for a successful stablecoin with tangible value, immune to such fluctuations.
Cryptocurrencies have not yet become an effective medium of exchange and compounding this issue is the fact that they lack intrinsic value which is the biggest factor stopping them from being adopted by the mainstream.
“Crypto transactions are often time-consuming, with transactions sometimes taking hours, fees to transact can also be quite costly depending on the price of the crypto.
But the biggest problem is the difficulty that comes with extracting your cryptocurrency into useable, real-world currency to be used at point-of-sale to make purchases, or to withdraw as fiat currency”.
How can stablecoins lead to the mass adoption of crypto on a global level?
“ The key to cryptocurrencies being widely adopted is simple; they must be considered as a stable store of value. For us to achieve this, we based our stablecoins on something extremely stable, for instance, precious metals such as gold and silver. If the cryptocurrency is backed by a stable asset the price of that currency will reflect accordingly.
If this currency can also be redeemable for the underlying asset, this will further validate the stability and trust associated with this currency”.
Most importantly, users of the cryptocurrency should have an easy and effortless way to liquidate their holdings into a currency which is widely respected, across the world. The attachment of a debit card would be the ideal solution as this would ensure users could send, spend or transact with these currencies at point-of-sale anywhere in the world, with a currency free from fluctuation, Coughlin adds.
“Current stablecoins have many issues which affect their valuation and usability. These include counterparty risk, such as when the bank holding the dollar backing is considered insolvent and a lack of liquidity. Or, an arbitrary mechanism being used to keep the stablecoin’s price in line with the price of the underlying asset”.
Why did you choose Stellar as your platform?
The reason we choose to use the Stellar blockchain network is due to the scalability the technology provides which offers upwards of 3000 transactions per seconds for a very low fee.
These features made the Stellar blockchain technology the most suitable option to sustain a global monetary system which can withstand user’s transaction all over the world and support of the attachment of a debit card.
The Stellar consensus protocol eliminates the need for resource intensive, energy consuming mining protocols, such as proof of stake or proof of work, like bitcoin and ethereum use. This makes transactions slow and consumes a vast amount of energy, Stellar has allowed us to avoid these pitfalls.
Your presale was very encouraging – what are the next steps for the project?
“ By the end of the presale of our Kinesis Velocity Token (KVT) we had successfully sold over 50,000 KVTs, more than 3 times higher than our assigned soft cap of 15,000 KVTs and we are well on track to reach our hard cap of 210,000 KVTs before the public sale ends on the 18th of March 2019. The next steps will include the issuance of our gold and silver-based currencies, KAU (gold) and KAG (silver) as well as the release of the Kinesis Currency Exchange (KCX), Kinesis Blockchain Exchange (KBE) and the Kinesis eWallet to the public in May 2019”.
Furthermore, Coughlin revealed that they will be rolling out the Kinesis debit card which will be in line with the development of global strategic partnerships and integration of Kinesis technology to maximize usage of Kinesis currencies through retail and customer-facing outlets.
In addition to this, Kinesis currencies, including the KVT, will be released across 3rd party cryptocurrency exchanges to ensure adoption and usage of Kinesis currencies is maintained, and that should result in continued growth.
“Our main strategies are in securing strategic partnerships and building a solid userbase for our underlying technology, the Kinesis Blockchain Exchange. This is where our financial ecosystem will sit and people will interact and be able to mint their fiat currency into digital gold and silver”.
This technology will serve as a simple and easy user interface that connects the everyday individual to the blockchain. This will give them the ability to create their own currency based on 1:1 physical allocated gold and silver. People can then start to spend money within the ecosystem that generates a yield on all money spent, Coughlin added.
What will 2019 bring for the crypto market? Will it be the year of stablecoins?
“At the end of 2017 the world began to take notice of the crypto markets as Bitcoin prices soared as everyone wanted a piece of the pie. This seemed, and still seems to be the future of money, based on technological advances. Throughout 2018 the crypto markets underwent severe volatility. The rise of initial currency offerings (ICOs), decentralized applications, or dApps and crypto exchanges, all hoped to take advantage of the emerging industry to secure investments and a strong userbase. As we head closer to the end of 2018, with the markets once again in disarray, the crypto sphere is left questioning where to go next.
It has been evident that a void has been created which can only be filled by projects creating stability in the cryptomarkets”.
Coughlan explains that USDT Tether has had significant success as the leading stable coin across exchanges and the crypto markets, however, they have been criticized and declared untrustworthy as a result of the failure of audits. This has been widely covered in the crypto press and remains a cause for major concern for prospective investors.
“Industry leaders, like Vitalik Buterin, founder of Ethereum, believe that at this point, for the space to move forward we need blockchain projects with real-world applications. The next wave of crypto adoption will be built on useful applications that deliver value to people, and we agree. This is why we have introduced a cryptocurrency which encompasses two of the most stable stores of value the world has known, gold and silver”.
“So to sum up, I strongly believe that 2019 will be the year of the stablecoin and we hope to be at the forefront in making this a reality”, Coughlin concluded..
