Important Notice on BullionCoin following its launch on 15 August:
BullionCoin and the Allocated Bullion Exchange have been collaborating closely with each other until it's launch in order to deliver a gold & silver backed digital currency.
However, a few minutes after BullionCoin's website went live, the ABX issued a statement announcing it was withdrawing from its collaboration with BullionCoin citing several reasons.
You can read ABX's full statement here. You can read BullionCoin's reply to ABX's statement here.
Whilst this unfolds, I am going to treat the information as objectively as I can, and so should you.
I strongly suspect it may well turn out to be a storm in a tea cup and not actually be anywhere near as drastic as it sounds, and BullionCoin could well become the digital currency we all want it to be.
Things like this often happen in business and it should not reflect poorly on either party as they both have a great product.
I have spoken to Thomas Koenye, the co-founder of BullionCoin, and it looks like ABX's statement may have been unfairly issued and there are some areas that need clarification which I have added as a pre-face to ABX's statement. Thomas' reply is here.
However, as my primary and overriding concern is the safety and security of client and potential client money and their vaulted precious metals, I will always take the options and decisions that will not expose you to any risks. I will update you as soon as I have completed my due diligence on this matter.
If you have any questions about this then please do contact me and I'll be happy to help. You can also contact BullionCoin and ABX for further clarification from them.
David Gibson, Managing Director
This is a new digital asset that is going to be widely adopted by large mainstream international financial institutions, companies and individuals alike, unlike all of the other purely mathematically created cryptocurrencies.
BullionCoin is purchased into existence in the Primary Marketplace and traded within Secondary Marketplace. It is fully tradable, exchangeable, transferrable, and redeemable. They are a true transactional currency that also serves as a store of wealth, meaning it is both currency and money.
"To launch BullionCoin as the world's leading honest Digital Currency, 100% backed by gold and silver which are impossible to debase or devalue; fully exchangeable with other fiat and alternative currencies, where both gold and silver become earning assets using suitably structured incentive schemes."
Backed by vaulted 100% physical gold and silver bullion on a fully allocated basis
A Digital Currency Fully Backed by Physical Gold & Silver Bullion
Whether you think you know about cryptocurrencies or not, it's important to understand what separates BullionCoin from them. This is a digital currency, different and new.
BullionCoin has been carefully designed to be compatible with the monetary needs of the global financial markets, companies and private individuals. The central design tenet is that it fully backed by physical gold and silver bullion. Gold & silver has been used as money and as a means of storing value for over 5000 years. Over those millennia, no other asset has been able to similarly provide the necessary characteristics to match them.
The BullionCoin Exchange (BCX) and the Allocated Bullion Exchange (ABX) have both set out to unite the physical precious metals and global financial markets by using digital blockchain technologies. Together they have created a seamless and fully integrated trading platform that allows participants to access both of their exchanges.
This extremely well engineered technological solution, will deliver accessible liquidity and stability into the global economy that is also intertwined with very low counterparty risk on a level never seen before, whilst not being able to be debased.
Types of BullionCoins
There are going to be 2 types of digital coins representing 2 different asset classes:
- BullionCoin Gold - XAAU at 1 gram of Fine Gold
- BullionCoin Silver - XAAG at 50 grams of Fine Silver
The New Gold Standard
Redeem Your Digital Currency Back Into Physical
All holders of this digital currency are able to redeem them back into physical precious metals. So for each gold coin you redeem you get 1 gram of physical gold and for each silver coin you get 50 grams of physical silver.
If a large quantity of gold or silver is redeemed then you can get its equivalent sized bar. For example, 1000 gold coins will be equal to a 1 kilo gold bar.
Each coin represents physical grams of gold or silver, the base value of the coin will not drop below the spot price for allocated physical gold or silver. The coin's inherent stability is derived from being directly linked to a fixed, measurable and known physical quantity of precious metals.
In the incredible event that it does drop below the physical spot price, then you are presented with an enviable opportunity to buy physical gold and silver at a discounted price! However, I can't envisage a scenario where this might happen because market forces wouldn't allow it (we can only wish).
Asset Managers and investors can use both markets to their advantage. You are able to generate a perpetual yield that is linked to the coins you create in the primary market, which you then sell into secondary market. for short-term / overnight parking of capital in a stable & liquid asset.
This digital currency has been designed for typical currency transactions and short-term holdings via the BCX secondary retail market. This makes it ideal for short-term / overnight parking of capital for Asset Managers looking for a stable and liquid asset that has very low counterparty risk.
If you want to buy and hold physical precious metals to hold on a long-term basis for wealth protection, you should use our Allocated Bullion Exchange accounts instead. Consider opening an account for each, so you can store your savings in precious metals with the ABX and whenever you need extra currency for your transactions, all you have to do is to transfer some of your stored metal to the BCX in order to mint some more coins.
Transferring Your Existing Physical Precious Metals Into BullionCoin
Contact us so we can discuss your existing physical gold and silver holdings.
Many people already hold and store physical gold and silver. If that applies to you, then consider adding it directly into BCX and turning its title of ownership into an electronic format to then use as a currency.
Why convert it back into the fiat currency you got out of, just to re-buy it again?
Doing that means you will have effectively suffered 3 sets of costs, when you should only pay for it once:
- The original buy cost/fee
- The sale cost/fee
- The re-purchase cost/fee
Plus you will lose money on the offered sell and buy prices.
However, how it has been stored will dictate how easy you can transfer it into the BCX. This is because the BCX needs to ensure that all the precious metals it vaults and backing BullionCoin are 100% authentic and not tampered with in anyway. ABX & BCX will not expose any of its participants/users to the risk of counterfeit or fraud, so they always take the very secure, conservative approach when accepting your precious metals.
We will look at quantities from ozs to tonnes. Contact us to discuss further.
Changing the Way Money Exists
There are two aspects to our present monetary system:
- A very old & inefficient system that is sustained and easily manipulated by the incumbent banking system
- Nascent but highly efficient financial technological solutions whose implementation is being driven by people that recognise the old banking system is broken and no longer offers value
People and companies have had enough of the old inefficient banking system and are revolting against it by actively seeking new ways to efficiently transact business and money.
This rally against the banks is why the cryptocurrency / digital currency market has rapidly grown to over USD$100 billion in just a short space of time.
However, the growth of this new digital currency has been stunted by various design limitations and technological teething problems. Nearly everyone can see and understand its future place in the world as an integral part of our financial lives, but many are worried about suffering losses, whether due to software bugs, hacks and market volatility (and quite rightly so).
This is why for all its spectacular growth and potential benefits, the world's markets which are worth quadrillions of US Dollars are reluctant to use it.
So how the problem is how to get around this impasse and what advantages & benefits does that bring to BullionCoin?
The Safest & Least Volatile Digital Currency
Two of the important factors that many people such as Asset Managers and investors consider in an asset, is its price volatility and its safety.
As a digital currency asset 100% backed by vaulted physical precious metals, BullionCoin addresses both of these concerns.
Investors have reduced risk and exposure to the staggering price volatility that plagues other cryptocurrencies, whilst Asset Managers are able to use the stability and safety that physical bullion brings to park money overnight in a deeply liquid currency that does not carry the high counterparty risks that are associated with bonds.
The liquidity is made available by the built-in incentives to create liquidity in the first place and to then generate velocity in the turnover of its market capitalisation. Furthermore for any currency to be successfully widely used and adopted, it needs to be a safe, stably priced liquid asset.
Financial Incentives for Everyone at All Levels to Use BullionCoin
The problem with anything new and old, is getting people to use it. To achieve this, the 'thing' you are trying to get them to use primarily needs to provide a solution to their problem and secondly, reward them for their effort.
BullionCoin's advantages & benefits to everyone using it are multiple. Here's a small list:
- Cannot be manipulated by banks, markets or investors
- Near instantaneous international payments (about 4 seconds to lock into a blockchain ledger)
- Very low transaction costs
- No counter party risk
- Immunity from bank holidays and financial crises
- Price stability
No restrictions on how you can use your money or how much you're allowed to access
It also comes with financial incentives and rewards in the form of receiving a free income stream, forever! (No joke, con or Ponzi – it's the real deal). This is due to the transaction fees charged to the buyer will always be divided up between the relevant participants:
- Primary market participants will be paid a portion of every transaction fee that relates to the specific coins they created.
The primary participant's revenue is received forever!
- Merchants accepting BullionCoin payments will always be paid for each transaction they receive.
Normally merchants have to pay the bank 2-4% of the transaction value, instead the merchants will be paid an income, which will likely be a world first!
Minting (Creation) Liquidity
The production of digital coins will not be capped as the amount in circulation is purely dependent upon the quantity of physical precious metals bought by investors. Furthermore, a cap will only serve to create an artificial marketplace and pricing which none of us want as there is already far too much manipulation and artificial pricing in markets around the world. What we need is for an asset that is priced purely by natural market forces.
This way the value of 1 coin is easily calculated and known and there is no artificial premium inserted based on a limited supply. Traders, asset managers and institutions can therefore buy as little or as much as they want, based upon the physical precious metals supply added to the primary market and resold into the secondary market.
For anyone interested in minting / creating new coins, you will need to become a member of the primary market. It's in the primary market that you will be able to buy physical bullion, delivered by refineries & mints, from which you can then mint new digital coins.
Investors wishing to participate in the primary market will need to go through GoldVu as we are a member broker of the BCX.
No Initial Coin Offering (ICO)
The company behind BullionCoin is Digital Gold Ltd and it's registered as designated business with the Financial Services Authority (FSA) of Isle of Man. Digital Gold Ltd has decided that there will be no ICO.
ICO's are used as a way for companies to raise capital for its launch, operations and continued development.
BullionCoin is to be sustained and grown directly by investors who decide when to buy new physical gold & silver to be minted into digital currency. Therefore the digital currency will grow organically by investor actions, not by forced creation by the company.
Digital Gold Ltd is also well capitalised and does not need an ICO money injection to maintain operations. However, to entice investors to generate the initial liquidity, Founding Investors will be offered a special rate on the yield of the coins they minted during that founding investment window.
The BullionCoin Debit Card
The majority of users of will perform their transactions via the mobile or online payment applications.
However, as mobile payments still haven't been fully adopted worldwide, you are able to get a BullionCoin debit card and use it worldwide similar to the way you currently use Visa, MasterCard, American Express, etc. This will be initially given for free to high value accounts only, due to the cost of issuing the card. There may be a possibility that the cards could eventually be bought by people wanting to use this digital currency through a merchant system, but those costs haven't been confirmed yet.
It's unique in that you can use it for any local currency without having to first pre-sell your precious metals holding before using it. When payments are processed at the point of sale, the exchange rate for local currency vs allocated gold or silver is automatically calculated and the equivalent amount of bullion is debited from your e-wallet account.
No other "physical precious metals" debit cards are directly linked in this way to their bullion account. Other providers need you to first sell your gold and silver, after which you then have to transfer/load the realised cash onto your card.
The BullionCoin card is a genuine revolution in physical bullion card payments.
Cryptocurrency exchanges are at the mercy of the high volatility found in the cryptocurrency markets. When digital currencies flash crash then liquidity is sucked out of the system.
It's not a situation that is conducive to their short-term survival or long-term market growth. BullionCoin brings a much needed and critical level of stability to these crypto exchanges.
It provides the investors a safe haven for their money in a volatile environment and prevents these exchanges from having their liquidity withdrawn which further seizes up the market and exacerbates the problem.
It is the final critical component that these exchanges are looking for to be able to start directly challenging the mainstream exchanges that use traditional fiat money. This will change the role and position of cryptocurrency exchanges.
With investors being able to access & reinvest into a stable digital asset, everyone wins.
Furthermore, participating crypto exchanges may well create their own Tertiary BullionCoin market whereby you will be able trade them for other cryptocurrencies like Bitcoin. You'll need to contact any participating crypto exchange to see if they have plans to offer that service.