#122 - KaratGold (KBC): A Gold-Linked Cryptocurrency That Might Actually Work
Gold-linked cryptocurrencies have gotten a lot of flak, and this criticism is justifiable in many cases. There are many scammy actors out there in gold land, ready to take advantage of people’s economic ignorance, fear of the future, and survivalist drive.
Generally, criticism of gold-linked cryptocurrency falls into three main categories: 1) the introduction of centralization/trusted third parties, 2) the possibility of scams, and 3) the high costs and difficulty of maintaining such a system. In our analysis of KaratGold Coin, we’ll demonstrate how this gold-linked cryptocurrency may be an exception to this rule.
Centralization and Third Parties
It’s obvious that any company offering a gold-linked cryptocurrency will have to have a reserve of gold. This gold will more than likely be stored in a single location, or at most a handful of locations. Cryptocurrency is meant to be decentralized and free of trusted third parties. While this is typically how cryptocurrencies operate, it does not have to be the only way. The cryptocurrency market is diverse, needing various solutions for various problems. If crypto investors want gold backing, the infrastructure simply must be handled by a single company or concentrated network.
Karatbars International backs KaratGold Coin (KB). Founded in Germany and in operation since 2011, Karatbars is trusted purveyor of gold currency products. While no gold company can be perfect, an experienced provider like this is more trustworthy than the other relative newcomers entering the gold-linked crypto space.
As Tether threatens to topple following the NY AG suit, it’s obvious that even the most popular cryptocurrencies can defraud investors. Fortunately, for KaratGold Coin investors, Karatbars has submitted to audits of a quality and transparency never seen in the Tether saga. Furthermore, the company’s long history as a trusted purveyor of gold also makes scam unlikely. Karatbars isn’t just a crypto business. Defrauding investors in this space would threaten its other gold businesses that exist in conventional markets.
High Cost and Difficulty of Maintaining
This may be the most relevant criticism of gold-linked cryptocurrencies. It takes a lot of money and well-applied best practices to safely store and transport gold. It also takes innovative technology and engineering to link a cryptocurrency to a specific supply of gold, and for all sides of the accounting to be truly balanced. Even for well-meaning actors, mistakes can be made and value lost.
While this is all true, Karatbars already has the gold transport and storage side of the business well in hand. The company has been operating on an international level since 2011, and has many years of satisfied customers to prove it. From a technology standpoint, there are surely difficulties in maintaining a gold-linked cryptocurrency, but the coin has been doing well since its February 2018 ICO, and is today worth almost exactly what it was at the time of the crowdsale. And anyway, all crypto startups face these technology challenges.
All in all, KaratGold Coin seems to be the worthiest of the gold-linked bunch. And while there may be those who think gold-linked cryptocurrencies aren’t a good idea, this one seems like it might be primed for success.