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What is the GoldBack?

Prior to the final quarter of the last century most global currencies were backed by an asset, such as gold or silver. The United States was on the gold standard until 1971, prior to which the US Dollar stated, 'THIS CERTIFIES THAT THERE IS ON DEPOSIT IN THE TREASURY OF THE UNITED STATES OF AMERICA ONE DOLLAR OF GOLD PAYABLE ON DEMAND.'


A US dollar bill was essentially a promissory note, a bond, for gold.

Since the 1970’s, most currencies have been reduced to the status of fiat, which means ‘let it be done’ in Latin. Fiat currencies have no inherent value outside of a collective agreement that it’s worth something. Once a currency has gone fiat, it’s essentially just paper, and its value is easily eroded by programs like ‘quantitative easing’, which is basically a decision to print more money.


The problem with printing more money is every existing dollar loses value with every new dollar printed. Thus creating the inflation we’ve seen since the 1970’s and it’s devastating impact on the economy and the once-strong middle class. They are working just as hard as ever, making wages which indicate ‘on-paper’ that they’re middle class. But their fate is subject to a mechanism that consistently ensures each paper dollar can be exchanged for less and less stuff. This is inflation. You can see in the images below these inflationary (systematic removal of value) forces on the dollar since that time. 

Blockchain


The rise of Bitcoin, cryptocurrencies, and blockchain technology has ushered in a new era of cryptographically sound and secure digital value. The value of cryptocurrencies come from a few factors but the two major ones are ease of use and security. While cryptocurrencies are getting easier to use every day and security is very strong, the leap to daily use has, so far, been hard for the mainstream public. The intrinsic value of gold backed up by cryptography and blockchain tech aims to solve this issue.


In the wake of the 2008 financial crisis, the mysterious Satoshi Nakamoto published a white paper titled 'Bitcoin: A Peer-to-Peer Electronic Cash System'. The paper outlined a workable framework for creating functional and decentralized, digital currency, or 'Money on computers'. The problem with this idea prior to Bitcoin is obvious, it is too easy to make perfect copies of a digital file. If you email a friend a picture, you keep a copy on your computer, and send your friend a copy, allowing both of them to have exact replicas of the same digital asset. This is referred to as the ‘double spending problem’. Digital currency creators have been working for decades in an attempt to make sure a dollar doesn’t get spent twice at the same time in separate transactions. Satoshi Nakamoto solved this problem with, what is sure to be realized as one of the greatest inventions in human history, on par with the Internet itself, the Blockchain.


The Blockchain is a cryptographically sound, decentralized, digital ledger that prevents double spending through requiring consensus amongst its entire network. Once a transaction takes place, that transaction is ‘announced’ to the whole network, and once verified, is accepted and forever stored in the digital ledger as having occurred. The majority of the network must confirm for a transaction to be recorded as true.  This trustworthy, transparent, and decentralized ledger, called the Blockchain, has solved the double-spending problem and has led to the exponential growth of Bitcoin and other Blockchain inspired ventures. A new age of entrepreneurism is upon us. 


Mining Ones and Zeros


Bitcoin is created through a process called ‘mining’ which involves the computers that make up the Bitcoin network lending their computational power towards the perpetuation of the network. This ‘work’ is solving complex cryptographic puzzles, the results of which lead to the creation of the next ‘block’ in the ledger. This is where the newest batch of transactional entries will be recorded. Miners are awarded newly created Bitcoin for their work, which is how the new money comes into circulation.


When considering the amount of time, electricity, computing power, and ultimately money that goes into creating each Bitcoin (combined with the fact that there’s only ever going to be 21 million of them), the intrinsic energetic value of Bitcoin far surpasses that of a fiat dollar. At this writing, each Bitcoin is already worth more than $4000 USD, from far below a penny less than a decade ago. Estimates, plus its exponential growth curve so far, indicate this value is peanuts compared to where it’ll be in a few short years. Cryptocurrency and the Blockchain are here to stay, and will soon be ubiquitous.


Building a Bridge – Commodifying the Digital


As powerful and revolutionary as cryptocurrency is, its inherent material value consists of ephemeral ones and zeros powered by electricity. It’s hard to hold those things in your hand. The average person needs a lot of education to understand how something, which solely exists in a digital landscape, has a value of worth in the material world. But what if you could, just like you could before our dollars turned fiat, exchange your digital cash in for precious metals? What if every coin on a network like Bitcoins had an ever increasing supply of real gold back of it, redeemable and exchangeable on the classic common market, ensuring a perpetual and increasing base value to a digital asset? 


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ENTER THE GOLDBACK

Enter the GoldBack


At its essence, the GoldBack token is a  purchase agreement between the token holder and the GoldBack issuer secured inside of a smart contract and on the blockchain which can then be used exclusively in the GoldBack Ecosystem. Each GLDB token is a purchase agreement equal to a percent of company total gold storage and can be redeemed for its equivalent physical gold at any time.  This brings together the liquidity of this next generation of digital tokens with the material fortitude and time tested value of physical gold.  The convenience of money on computers combined with the peace-of-mind of gold.


UP NEXT: Mining as a Business - Securing the Blockchain


The GoldBack token has three separate strategies for the ongoing acquisition of the gold that’ll be backing it up outlined in detail on the next page. 


 

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