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Allocated Bullion Exchange unveils its vision for the future of money after seven-year development programme

Allocated Bullion Exchange unveils its vision for the future of money after seven-year development programme

Kinesis system to use wholly backed 1:1 by physical gold and silver stored in fully insured top-security vaults across the world 

Small day-to-day transactions via debit card to take 2-3 seconds

There is an argument that the traditional banking system is broken.

As Bitcoin values nosedived on August 14, the former CEO of Paypal, Bill Harris, told CNBC’s Fast Money programme that Bitcoin had no value, was slow to transact, volatile and had scalability problems.

“The cult of Bitcoin [makes] many claims,” he said, “that it’s instant, free, scalable, efficient, secure, globally accepted and useful – it is none of those things.”

These are common weaknesses across crypto currencies.

So what is the answer? We believe it is Kinesis, which has the potential to meet all of Harris’s criticisms.

Set to be launched by the Allocated Bullion Exchange (ABX) – the world’s first electronic institutional allocated physical precious metal bullion exchange – Kinesis is a wholly integrated value exchange system, linking to globally accessible crypto currencies that are directly backed by hard assets in gold and silver, giving them intrinsic value.

The real challenge for an alternative global system of value exchange is not for it to be a wealth creation exercise for the elite, but an effective method of transfer that is stable, cannot be manipulated by institutions or governments, protects the individual, has an intrinsic value and can be used quickly for ordinary, day-to-day transactions.

It should also act as a barrier to crime, particularly money laundering and terrorism financing, and offer a reasonable alternative to expensive wire transfers for the ‘unbanked’.

The Kinesis currencies will fulfil all of these objectives.

The Kinesis currencies

KAU (gold-backed, 1 KAU = 1 gram of gold) and KAG (silver-backed, 1 KAG = 10 grams of silver) are linked directly to above ground gold or silver, so can never be sold below the current price of gold and silver, which gives them stability. The currencies are protected, as they decentralise control from banks to the individual, who retains 100% title to their value at all times, unlike bank deposits.

The deposits of fully insured gold and silver are held in third-party vaults with the highest security rating across the world and these holdings will be subject to semi-annual third-party holding audits. To put that in perspective, the last full audit of the gold held in Fort Knox took place in 1954. The Kinesis system is based on LBMA (London Bullion Market Association) bars, officially recognised via the legacy system, with all associated taxes paid.

In short, Kinesis is an ethical system that enhances money as both a store of value and a medium of exchange.

Transactions take just 2-3 seconds and are proportionate to what you are buying, so, unlike other crypto currencies, these can actually be used in day-to-day transactions like buying a cup of coffee.

When you pay over the currency unit, which can be allocated using your Kinesis debit card, you are also paying over that percentage share of the gold or silver that goes with it. At the same time, transactions costs are a fraction of alternatives, making the whole system viable for day-to-day use in even small amounts. And the Kinesis debit card can be used to access cash at ATMs.

This is a credible and auditable system and has already won the backing of, among others, the Indonesian Post Office, which has signed up to use it in handling its $12.5 billion of assets. What’s more, Kinesis is Sharia compliant because it makes its yield from transaction fees not interest.

What this also means is that for the first time ever precious metals attract yield as physical assets in a way that encourages trade and transactions.

The Kinesis system is an evolutionary step beyond any current monetary system available in the world today. It enhances money as both a store of value and a medium of exchange.

Kinesis Velocity Tokens and how they work

Underpinning it is a unique multifaceted yield system that promotes the use of Kinesis as a medium of exchange while distributing back the wealth generated according to proportionate KVT (Kinesis Velocity Token) holdings and velocity.

The KVT is an investment in the soon to be launched Kinesis Monetary system. Stakeholders are essentially buying into the success of the system. Holders of the KVT tokens will receive a 20% proportional share of the transaction fees from the Kinesis Monetary System.

The token rewards participants, proportionately to the growth of Kinesis Monetary System. To perpetuate growth of the Kinesis Monetary System, Kinesis have released the Kinesis Velocity Token (KVT). KVT’s are limited to 300,000 only. This will create an additional layer of income for token holders on top of the value of the token itself.

This is not a gimmick that has suddenly emerged from nowhere, but a system carefully devised over seven years, based on the accredited ABX exchange, which will employ the block chain to ensure global security.

“We provide a value and a unit of account and we solve the medium of exchange issue, while the system produces a yield,” says CEO Thomas Coughlin.

The only way to bring this currency to the people is to digitize it and allow it to trade in very small amounts.

 So what is Kinesis?

  • A banking and monetary system, Kinesis has an advantage over other crypto currencies because it has been born out of an established organisation: Allocated Bullion Exchange ABX (2011). That enjoys an unblemished track record, which it is vital to retain, so the reliability of Kinesis is paramount because there is so much at stake.
  • The top tier of Kinesis is the primary market in which the average person can mint their money by converting fiat currency into KAU (gold-backed, 1 KAU = 1 gram of gold) or KAG (silver-backed, 1 KAG = 10 grams of silver) linked directly to above ground gold or silver.
  • It is then admitted into the secondary market using block chain, where it becomes an efficient medium of exchange of value, because it can be traded quickly and reliably and is not volatile. Transfer of value takes 2 to 3 seconds anywhere in the world, and the use of block chain protects users against fraud and cash flow problems.
  • Kinesis incentivises the money to move because all parties involved share in the proceeds of the transactional fees that arise as a result. It is the only system in the world where people get a benefit from spending their money.
  • The system is ethical because it’s based on LBMA (London Bullion Market Association) bars. It’s officially recognised via the legacy system and the taxes have been paid.

Where is the gold and silver stored?

  • The gold and silver backing Kinesis is stored in fully insured third-party vaults with the highest security rating around the world that will be subject to semi-annual third-party holding audits. It is assigned to Kinesis via KVT (Kinesis Velocity Tokens), held by founding investors in the Kinesis system.

Why is Kinesis attractive to the consumer and investor?

  • Depositing money in a bank in the traditional way effectively means taking on bank risk where you are exposed above the guarantee limit. Kinesis does not expose you in this way because it is backed gram for gram by gold and silver. There is no counter-party risk because the depositor retains title to the gold and silver represented by their deposit. With paper deposits, the bank retains title and issues a warrant of title to the depositor. If the bank fails, the risk is passed on to the paper depositor above the guarantee limit.
  • As Kinesis is managed via the block chain rather than the traditional banking system, it protects against haircuts for depositors, as happened in Cyprus (2012-13)
  • With other crypto currencies the title can be held by the exchange and the end user holds a warrant to that title. This is why crypto exchanges get hacked, because they are effectively treasuries.
  • With Kinesis title to the associated gold or silver remains 100% with the depositor.
  • This gives power to the individual over the institutions.
  • Kinesis is also cost efficient, with transactional costs at just 0.45% (with Western Union it can be up to 20-25%, but typically 5-10%).

Why would countries back you when what you are doing would limit their ability to control currency?

  • Most governments hate cash, because it limits their ability to fight crime like terrorism. Kinesis digitises the system and anyone who wants to participate in the system has to go through the Know Your Customer (KYC) process, working through Unified Signal, before they can gain access to it. Unified Signal control every cell phone for billing in the US, as well as the medical systems for the US, and provide the digital wallet through which Kinesis operates. This means there is no way of laundering the money through the system. You have to establish credibility before you are allowed to join.
  • Because of the above, governments will be more empowered to tackle tax evasion.

What evidence is there to show the credibility of Kinesis?

  • The Indonesian post office has already signed up to the Kinesis system. It has $12.5 billion of assets.
  • Deutsche Bourse is set to become a liquidity provider to ABX
  • Kinesis has already reached target for pre-launch investment.
  • No one is being permitted to take a concentrated position on the currency.
  • The Kinesis advisory board includes precious metals specialist Andrew Maguire, who exposed the manipulation of the silver markets to the US authorities, and now also sits as an advisory board member for the ABX. Others include major figures across the global precious metals markets

In summary, then, Kinesis crypto currencies are suitable for day-to-day use and the feature of consumer banking because:

  • The currencies are backed by precious metals gram for gram, giving them intrinsic value and stability
  • Title to the currencies’ value remains with the end user, not a bank
  • Transactions are easy and take only 2-3 seconds
  • They are scalable because they can be used for instant transactions in small amounts, such as paying for a cup of coffee, with payment via a debit card.
  • Transaction fees are a fraction of other payment methods.
  • The system is secured in the block chain, defending it against market manipulation and money laundering

From a social and geo-political standpoint, Kinesis has the following potential: 

  • Protection against corruption, money laundering and tax evasion
  • Protection for the ‘unbanked’ against exploitative fees from money transfer services
  • Protection against market manipulation by banking and other institutions
  • Empowerment of the private individual

Global Banking & Finance Review


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