Money is fundamentally a storage medium for labour. In that sense, proof of work in the Bitcoin blockchain is comparable to the effort that’s required to dig up and process gold.
SendGold’s initial two year effort in research and due diligence of contemporary digital money led to a unique business model and platform for digitising gold.
The SendGold journey started with a hypothesis that Bitcoin, or one of twenty-odd other crypto-currencies we tested, could be brought to investors as a new asset class. But these monies simply proved too wild, with too little regulatory certainty for the likes of the target market.
We turned instead to precious metals, especially gold, as having an ideal bundle of characteristics for a very modern customer of digital value. To interface physical assets online, we need a suitable transaction platform. Many start-ups in this space have adopted blockchain but after much investigation, several in-house trials and even an end-to-end prototype on a distributed ledger, we decided none of the current public blockchains meet our requirements.
It seems an unusual decision. Why wouldn’t SendGold launch with blockchain at its core?
Found a better mousetrap
Simply put, there is no shortage of tokenization methods for representing physical assets on various blockchains where SendGold retains complete control over the core software and operating infrastructure. Furthermore SendGold spent two years making sure its infrastructure was globally compliant.
Blockchain and Gold – redundant proof-of-work
And there’s one other reason to avoid blockchain today for managing gold. If money is stored labour, and if Bitcoin mining is analogous to digging for gold, then putting gold on the blockchain is redundant!
Blockchain was designed for purely digital assets, and it needs to simulate the effort needed to mint real money.
It may seem unfashionable, but we know that putting gold on a blockchain is literally more effort than it’s worth, adding a layer of cost. As and when a more efficient decentralised ledger technology emerges, SendGold is ready to evaluate and if it makes sense, bring it into the platform.