Kinesis Money - Investment Idea - Merging Crypto w/ Gold and Silver
Disclaimer – this is NOT a paid piece. However, I will link my referral code below in case I have interested you in Kinesis and want to sign up.
Bottom Line, Up Front – Kinesis is essentially if gold and silver had a baby with cryptocurrencies. When you buy Kinesis KAG or KAU, you are buying digital representations of silver and gold that are redeemable for physical silver and gold. This is NOT buying an unbacked cryptocurrency that relies on other people to buy your crypto to make it have value. I am an advocate for sound money and want to use gold and silver as money. Here, I tell you the case for why.
Kinesis Monetary System is positioning itself to be one of the most revolutionary monetary systems in the history of the world. This company blossomed out of the Allocated Bullion Exchange, an Australia-based gold and silver physical bullion storage company founded in 2011. Kinesis combines the power of blockchain with physical gold and silver bullion, creating a potential alternative to long-held fiat currencies such as the dollar, euro, pound, and yen. If Kinesis is successful, early purchase of Kinesis Velocity Tokens could be comparable to buying Google or Facebook stock in their first few years.
The premise is this: An investor can exchange cash or cryptocurrency for physical gold or silver and have it stored in Kinesis' privately allocated vaults in New York, London, Sydney, Hong Kong, Singapore, Dubai, Lichtenstein, or Zurich. The investor then has the ability to store, spend or transfer gold or silver to other Kinesis investors (members). Each transaction is recorded using the blockchain as a public ledger, thus keeping track of who actually owns the physical gold and silver in the vaults. The Kinesis vaults are audited on a semi-annual basis by an independent auditing service that has been in business for over 100 years. The Kinesis exchange, therefore, provides a digital currency, backed by precious metals, that investors and consumers will find is very liquid, secure, and in units that work in everyday transactions.
Investors in Kinesis also have the ability to withdraw their physical gold and silver and have it shipped directly to their home. The minimum withdrawal is 200 oz silver or 100 grams of gold. This is at very competitive prices (for example, one user redeemed 200 oz silver for about 8% over the spot price including shipping, withdrawal fees, insurance, delivered to his door.) Those following the silver market these past few months will realize that premiums have recently been as high as 30% on physical silver. Online bullion dealers are currently selling 100 oz silver bars for a 15-20% premium over the spot price. This ability to acquire physical silver or gold at a discount will likely catch on with people who want to accumulate precious metals.
An exciting thing about this system is that it rewards users for keeping, using, and transferring gold and silver within the system. The fee on each transfer is 0.45%, about half of which will be redistributed to all the users of the platform. So instead of paying a vault company to store your gold or silver Kinesis will pay the user. The other half of the fee is split between large partners and overheads (storage, insurance, company costs, etc.). The Partner yield is particularly important in motivating partners to encourage usage among their user bases.
Kinesis currently has a public-private partnership with the post office of Indonesia. The Post office plans to start paying their employees in Kinesis gold (KAU) and to use the Kinesis system as their primary bank. At this time, it is estimated that two-thirds of Indonesians don't have a bank account or are underbanked). Kinesis investors believe a system like this can provide value to individuals and economies which have limited access to traditional banking institutions.
People who live in advanced economies should be concerned that their governments are printing trillions of dollars in aid and stimulus (again and again!). Developing economies often have unstable local currencies and their citizens may not want to store or save money in their local currency due to the potential for rapid devaluation. Venezuela, Turkey, and Lebanon have all been in the news recently due to a loss of faith in their currency.
Want to have the ability to spend your gold, silver, or cryptocurrencies? Kinesis has rolled out a physical debit card with a limit of $20,000 in the US. Later this year the card should also be available in the UK and Europe. They also have a virtual Visa debit card for worldwide use with a modest limit of $500 dollars.
Potential major markets I predict they could break into, disrupt, and take a major dominant market share over the next decade:
1. Physical gold and silver bullion storage. Currently, it costs about 0.5 to 2% annually to store your bullion in a vault. This is the primary disadvantage to owning physical gold and silver, it pays no yield and costs money to store large quantities. With Kinesis you can earn a small yield on your gold and silver which will be competitive in a world of near-zero to negatively yielding bonds. There is no fractional/derivative aspect like the COMEX or unallocated bullion dealers.
Each gram of gold or ounce of silver is legally titled and held by a single person on the blockchain. A token is not created in the system until they buy and store the metal in the Kinesis vaults. The tokens are easily divisible into smaller fractions similar to bitcoin. This plus the tight trading spreads on the gold and silver in the Kinesis system make them viable to be used as alternative currencies.
2. International money transfer/remittances. Kinesis Money charges a flat 0.45% fee to transfer your digital gold and silver to anyone in another country with an account. This would be an ideal system for international workers from less affluent countries looking to send money back home to their families. No forex fees. The transfer happens immediately. They report their system can handle ~3000 transactions per second so there is a significant ability to scale.
Typical Western Union or Paypal international transfer fees are about 5% plus up to 6% forex conversion and another 2-3% if you paid via credit card.
The yearly remittance transfers across the globe are quite substantial.
3. Credit card processors. Visa, Mastercard, AmEx, and Discovery. The way their business model works is that they charge the business 1.4-3.5% of your total every time you use a credit card machine. Businesses eat this cost so it is not passed directly on to the consumer, but consumers pay this via higher prices.
The way the Kinesis Visa card currently works is that you sell some KAU/KAG and "top up" your card with money. Doing this on the Kinesis exchange will cost you 0.22%. Visa is likely still charging something as well, but paid by the merchant.
The goal is to get merchants to start transacting directly via KAU/KAG transfers. In that case, instead of paying 1.4-3.5% to the credit card companies, it's 0.45% which could be huge savings to merchants doing a high volume of credit card transactions. This means that merchants can save money relative to Visa, Paypal and other credit and online money transfer services. Kinesis offers businesses the ability to partner with them and earn a return on all of the transactions done through their system.
4. Banking. Indonesia has about 270 million people. Indonesia has a young population and it is estimated that two thirds do not have a bank account or have very limited banking access. Now if you have a smartphone you can use Kinesis as your banking system. Kinesis is currently launching a public-private partnership with the government of Indonesia to use as the main payment system for the entire postal service in Indonesia. They are building a gold and silver vault in Jakarta to service the country's needs. Kinesis is reportedly currently in talks with other countries as well. I estimate that there are at least a billion people worldwide that don't have a formal bank account but do have a smartphone.
5. Bring cryptocurrency users into the gold and silver markets. Easily convert some of your crypto profits into a more stable, less volatile asset for diversification. It is quick and seamless to send your cryptocurrency to your Kinesis wallet. You can also buy, sell, send, receive, and store Bitcoin, Ethereum, and USD Tether. Kinesis management reports they are working to bring more cryptocurrencies to the Kinesis exchange.
6. Increasing investment demand for precious metals. Most people have no allocation to gold or silver in their personal investments. The average US investor only has about 0.5% of their total investments in gold and silver. If this increases to a modest 5% that would be a 10x increase in demand for the metals.
7. Partnerships with large institutions or investment funds. Kinesis states that they can tailor solutions for multinationals, investment banks, brokers, pension funds, asset managers, trading firms, and precious metals refiners and traders. They are partnered with Deutsche Börse, a European asset trading and clearing platform. This ability to partner with large groups opens the potential for exponential growth in precious metal trading on the platform.
8. Direct competition with modern central banks. Are you concerned about the massive money printing the Fed and our government is currently doing? Are you concerned about inflation and the erosion of purchasing power of the dollar?
Stimulus money printed in the past year: (not including the new $3-4 Trillion dollar infrastructure bill that's getting drafted now or the 2nd stimulus bill of 2021 that's being proposed by the current US administration). It's really easy to make a few trillion dollars with the touch of a mouse these days. Free money for everyone!
How do you make money while using Kinesis?
Minters Yield: 5% of master fee pool
This is for people who bring money into the Kinesis ecosystem, a process called minting.
Velocity yield: 5% of master fee pool
Be rewarded every time you trade KAU and KAG on the Kinesis Exchange or spend it with your Kinesis Debit Card. Earn a monthly yield, simply for using your gold and silver as money.
Referrer's yield: 7.5% of the fee's generated by those you directly refer
Have a group of friends and family who you think would like to use real money to transact with? Kinesis has a great referral system where you will receive a percentage of the fees that your referrals generate. This is not a multilevel marketing system as it only applies to the people you directly referred into the system. This makes it much more of a flat referral model.
Holders Yield: 15% of master fee pool
Those who hold their gold or silver in the Kinesis vaults will receive 15% of the money from the master fee pool. Your personal share of this is calculated by taking your percentage of how much gold and silver is divided by the total amount that is stored. This way your gold and silver earns a dividend instead of you having to pay the typical storage fee.
KVT yield: 20% of master fee pool
So how does one best profit from this should Kinesis become a major success? From my research, the best way is to acquire KVT (Kinesis Velocity Tokens). The KVTs allow you to participate in the company's success by receiving a dividend of gold or silver. They essentially function similarly to a non-voting share of stock that will pay a perpetual monthly dividend based on the amount of silver and gold that gets traded across the platform. Kinesis started the company by selling KVTs for $1000 each raising an initial $200 million in start-up capital.
There are only 300,000 KVT tokens that were ever created making them fixed like bitcoin. You will receive your # of KVTs/300,000 x .20 of the master fee pool. If Kinesis is able to capture 1% of the total gold investment market over the next few years a single KVT could payout thousands of dollars in dividend yields each year.