With the world’s bank currencies under increasing pressure and distributed ledger currencies yet to achieve stability, digital gold is proving an attractive alternative.
Australian fintech SendGold has found a way to combine the best qualities of physical gold, a trusted store of value for thousands of years, with all the advantages of distributed ledger currencies.
SendGold investor and advisor, Ken Chapman, says digital gold is the solution for investors who want to hold physical gold but don’t want all the problems that come with storing it.
“From an investor’s perspective, owning gold has always been a complex issue because if you hold it physically you have to keep it somewhere very secure, it has to be in a safe,’’ says Chapman.
“It is quite heavy to carry around, and it is not like a bond which can be traced if lost. And dealing in gold it is actually a very complex process as well.’’
SendGold gives investors the ability to own physical gold and manage it digitally.
Investors’ gold bullion is stored in high-security vaults in Australia, and insured by Lloyd’s of London. Yet by using the SendGold mobile app they can instantly buy and sell that gold, or use it as a digital currency for peer-to-peer payments.
SendGold’s Chief of Security Steve Wilson says the company spent several years developing the underlying platform to ensure it would deliver all the stability of physical gold on an easy-to-use digital platform that was secure and fully compliant with global laws and regulations.
“Our goal was to provide a friction-free digital experience of the physical asset gold,’’ says Wilson. “We absolutely buy into the digital mindset: we want frictionless, we want no intermediaries, we want real peer-to-peer movement of assets—but we also want stability and security.’’
Wilson says SendGold initially considered building the app onto a distributed ledger backbone but decided that they were presently too unstable, and the underlying technology was not yet mature enough.
“Our team has a very broad base of expertise,’’ says Wilson. “We looked at it from a currency theory point of view, from a governance point of view and from a business risk perspective.
“We did some very deep due diligence on over a dozen different platforms and a couple of dozen digital currencies, and finally decided we would join gold onto a conventional backbone.
“We didn’t feel that the Wild West of distributed ledgers was the best way to protect people. They are effective for purely digital assets, but they are also very volatile. We think that we have solved the problem using fairly conventional technology, which is very mature, very conventional and therefore very reliable.’’
SendGold Investor David Klinger, says “I really like the fact that SendGold has been built to an institutional standard. SendGold is approved by the appropriate regulators for AML and KYC to comply with Australia’s money laundering and terrorism financing laws—and has been developed by some of the world’s best security experts. This means that as the regulation in distributed ledgers catches up to securities regulation, they will not be caught out.”
Gold’s timeless appeal
Investors love gold because it is the only investment asset that has survived every war, calamity and economic recession in history. And in the current times of economic uncertainty, its appeal as a hedge against currency fluctuations is on the rise.
As global quantitative easing gives way to quantitative tightening, analysts are warning the withdrawal of this “monetary amphetamine” could cause a relapse of the conditions that led to the Global Financial Crisis.
In this climate of doubt, trust in the global US-centric monetary regime is declining, and countries around the world and emerging markets in particular—China, Russia, India and Turkey included—are boosting their gold reserves drastically.
Chapman says during such periods of currency instability, gold always shines as an investment alternative.
“We are talking about gold, which is a physical reality, it’s mined out of the ground and has uses, you can make jewellery out of it etc,’’ says Chapman.
“That’s the security SendGold offers. It is not a distributed ledger currency, although it combines gold with some of the elements of how digital assets like share certificates are transferred.
“With SendGold there is an audited piece of gold in our holding there for you. It is not a virtual piece of gold, it is a real piece of gold, it’s just that you can transfer the rights to it digitally. SendGold provide a very low-friction way of acquiring it and having it.’’
It is being rolled out to more countries worldwide, and is already live in various forms in India, New Zealand, China, Vietnam, Indonesia, Hong Kong, Singapore and the Philippines.
This means SendGold investors can legally use gold as a liquid currency for peer-to-peer payments internationally. And at any time, they can convert their gold back to a local bank currency. SendGold’s B2B forex partner enables cashout in more than 140 currencies in more than 190 countries.
SendGold is currently conducting an equity crowdfunding offer via the OnMarket platform. In previous capital raising rounds, SendGold has raised $2.3 million from wholesale investors. Through equity crowdfunding, retail investors now have the opportunity to invest in this innovative fintech company for the first time. SendGold is targeting a minimum raise size of $500,000, and a maximum of $2 million. The SendGold offers closes soon, and has a minimum bid size of $250.