A Cryptocurrency Backed by Gold in Australia

Second, only to China in terms of gold production, Australia intends to maintain its key leadership position on other Asian markets by a show of power from the Perth Mint. As Australia’s largest exporter of gold, with about $18 billion in revenue from exported metals, the Perth Mint plans to win back investors, who have been lost to the recent cryptocurrency frenzy by creating their own virtual currency, backed by gold.

According to Richard Hayes, Director of the Perth Mint, this will help stabilize cryptocurrency prices, as well as making transactions faster and more secure.

Reinventing the Wheel

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Founded way back in 1999, this isn’t the first time that the Perth Mint has had to reinvent itself to keep up with the times. Unlike its predecessors, the Sydney Mint and the Melbourne Mint, which have disappeared since the 1930s, the Perth Mint carried on but ceased the production of gold coins for the British Empire and committed itself solely to the production of gold bullion.

With innovation being the key word to success, as of 1958, the Mint began producing some of the purest gold ever to hit the global market. The so-called “vintage” purity was at about 999.999% pure and was commonly known “six-nine”. Briefly, during the Second World War, they resumed the production of money. But, as of today, the Royal Australian Mint, founded in 1967 oversees the production the country’s currency.

In November 2015, due to an increase in public interest, the Perth Mint started a trading platform for investors to be and sell gold on the markets. For thousands of years we have secured fortunes backed by gold reserves, however, this is no longer the safest bet. As of 2008, with the creation of Bitcoin, the entire world of finance has been turned upside down.

The Re-Appropriation of Gold by the Mighty Bit

Created in 2006, both Blockchain and Distributed Ledger Technology, or DLT, are the backbone of Bitcoin. Combined, they ensure its reliability and integrity thanks to its peer-to-peer encryption. And, also through its wide distribution of its network for any new values that are created.

All cryptocurrencies are based on a single, and somewhat abstract, “Bit”. These Bits guarantee the storage of information and are effective due to their availability to all users of the same Blockchain. Each alternative currency, or altcoin, relies on its own Bit of the Blockchain.

Richard Hayes recently stated, “I think the world is going through a time of growing uncertainty, which is why you see people turning to alternative measures. And you see this massive influx of capital and funds into Bitcoin and its derivatives because people are looking for something other than traditional forms of investment.” This explains why the Perth Mint has now proposed an alternative currency. “Which will have all the beneficial aspects of a distributed networks, namely very fast transactions which will facilitate trade. However, it will be backed and supported by precious metals. So, there is a non-virtual aspect of it that will ensure its value.”

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However, the idea of encrypted currencies being backed by gold or other natural resources is not a new one. There have been numerous attempts around the world. The best-known experiments have been OneGram and GoldMint.

OneGram, a Qatari borne initiative, only manage to achieve about 0.14% of its projected $500 million in electronic token sales. On its second launch, they managed to get better results and raked in about $8 million in token sales in just six months.

Meanwhile, on February 15th, Venezuela is planning the launch of its own cryptocurrency backed by their reserves of crude oil.

What’s Next for Australia?

According to Director Hayes, “In the next 12 to 18 months, we will have made a significant step in the direction of a new alternative currency” said Hayes director Perth Mint.”

Until then, we will have to wait with bated breath to see if this new initiative by Australia will bring any more confidence or stability to the world of virtual currency.

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