GoldBackedCoin (GBC) is the first cryptocurrency which is fully backed by gold. Cryptocoinsnews asked for an interview with Chris Glatz and Wolfgang Weinmann, the two founders of GoldBackedCoin.
Who are the people who operate GBC?
CG: The founders of GBC are Wolfgang Weinmann and myself, Chris Glatz. We are two passionate entrepreneurs and cryptocurrency fans. Our team currently contains seven other people who are in charge of the daily business.
How did you get to operate in the field of cryptocurrencies?
WW: Well, I was intensively engaged in cryptocurrencies at a quite early period. I had started to become acquainted with Bitcoin at a time when its price was less than one US-Dollar. Fortunately, I recognized the big potential already at that time. But to be honest, I did not expect that such a boom would occur so rapidly.
CG: And I can remember that even though I read about Bitcoin early, I was too involved with other things at that time; I only got detailed information about Bitcoin from Wolfgang several months later. In fact, we shared the opinion that, in digital age, digital currencies will play an important role in society. So we started to intensively research the field and discovered the Ripple network where we`ve been quite active since.
How did you get to the idea to cover a virtual currency with gold?
CG: Actually for someone who reads a lot about economy and economic history the idea to back a currency with gold is not new. Our idea of a gold-backed cryptocurrency had already arisen in the spring of 2013. So we started working out a concept that could be put on stable ground.
WW: In the meantime, the world has seen many copycats of Bitcoin emerge, and it is currently not easy to keep track of all these – often indistinguishable- coins. Clones and copies are all over, how can that be sustainable?! So while we were working on our vision of a new cryptocurrency we could see more and more clearly that we were on the right track, as the market needed a unique alternative. The work involved in order to reach this goal is easily underestimated! It costs many efforts to create a virtual currency whose value is not only backed by a physical item, but whose value is guaranteed. Though it took much time to improve this system step by step, in order to minimize the risks for us and for our investors, now the whole system works perfectly and has become a unique investment opportunity in this market.
The aim to fully back the GBC with gold seems promising, as gold appears to be on the rise. But how is it possible to hedge the price if gold were decreasing? Wouldn`t that mean that the GBC lost in value?
WW: When we are talking about the gold price, I have to add that from the perspective of technical chart analysis, it has been
foreseeable for months that the price of gold would rise again. But to answer your question: The owners of our coin will not only profit when the price of gold rises – we are no gold sellers! – but they will also profit because you can trade the Gold Backed Coin on the free market. If you are looking at the dynamics of the cryptocurrencies today and the lack of good new ideas, you can see that there is a high probability that the market price of GBC will rise significantly over time. This seems to be especially true if you identify the fact that most of the other currencies on the market have no backing at all, while GBC offers the full gold backing of one tenth of an ounce of gold per coin. The ups and downs of the gold price will not be hedged, but by depositing the equivalent value in physical gold in Switzerland, we guarantee that the value of the coin will always be at least one tenth of an ounce of gold.
CG: If ever the market price of GBC were to drop below the gold backed value, most likely many investors would buy the coins because their price would be less than their inherent value. If this were not the case, we would take the appropriate amount of gold to push back the market price above the level of the gold backed value. We would do that by buying back the coins on the GBC/BTC-market in the Ripple network. Concerning the question of possible ups and downs of prices, this is a usual occurrence that depends on many factors: the current value of BTC, the price of physical gold, and the price that the investors view as reasonable for the GBC. Moreover, changes in the economic policy or the macro economic situation cannot be neglected, as well. All these factors influence the price of gold, of real currencies and BTC – and the Gold Backed Coin is not isolated from that, but it is a part of this ecosystem.
Many investors may ask themselves how the founders of GBC estimate the development of the market price of GBC in the future. Shouldn’t it parallel the development of the gold price? Is an extreme rise in the value of GBC possible at all? Do you want that? To me it seems that stability is the key element of your concept.
CG: Investment opportunity and stability are combined in our concept of Gold Backed Coin in a synergistic way. Stability is one half of the incentive for the investor, but investment opportunity is the other. It is important to state that the Gold Backed Coin is a virtual coin backed by gold, but it is not gold itself – there is an important difference! We suppose that there is a big motivation for the investors to trade their coins at prices on the GBC/BTC market that are higher than the prices at book building. Our concept sets no limits to a rise in value, and therefore, a boom is of course possible. In contrast to our competitors’ products, it is a combination of investment opportunity and stability which forms the crucial motivation for smart investors.
How do you deposit all this gold? In your announcement, you stated that there might be 13 million coins, and each coin is backed by one tenth of an ounce of gold. How do you finance the cost of depositing? Or do you buy gold certificates?
WW: In the beginning, there will not be tons of gold – as many have suggested – but the amount of Gold Backed Coins is limited by the demand in the book buildings: Only the buyers of GBC with their orders define the exact amount of coins issued. The backing will not be there in advance, but the coins are backed at the time of the book building, when the appropriate number of coins are being issued to the investors. It will be physical gold, not certificates.
How do you prognosticate the further development of Bitcoin and the cryptocurrencies worldwide and in Europe?
CG: Both currencies, GBC and BTC, are, in their conception as well as in their realization, internationally and, in fact, globally oriented: Everyone can aquire them on the internet and can trade them. We probably have to speak of a decade of cryptocurrencies that have already begun. But at present, virtual coins are being created in great numbers, and only the best of them will survive. Gold Backed Coin has a key comparative advantage over other virtual currencies, and this advantage will become more obvious once it has established itself on the market as a sustainable digital currency. We hope that GBC will be a decisive step forward for the whole community, including investors and developers and that it will advance the discussions about the cryptocurrency topic. The direction in which everyone will be moving over time is the broad acceptance of secure digital currencies within society.
What are the plans to establish GBC on the markets? Shouldn’t a cryptocurrency be regarded in the first place as a means of payment rather than as an investment? Are there any plans for online shops or acceptance places?
WW: We are following a slightly different plan. First of all, GBC is an investment opportunity. Everyone who is taking part in the book building and who orders GBC contributes to the development of more sustainable concepts. Anyway, the option to function as a means of payment is still open for GBC. Right now we are in intensive negotiation with some enterprises who are interested in cooperation, and it may be that some new perspectives arise. In the beginning, however, Gold Backed Coins are only issued within the Ripple network and traded there, and as long as they stay within Ripple, you cannot directly pay with them. But for the future, we can imagine that there is a way to transfer GBC out of this system and pay with Gold Backed Coins. Just wait a few months, and maybe some things will change into this direction.
What do you think the order volume for Gold Backed Coin will be?
WW: From the perspective of an investor, I expect GBC to become a big success due to its concept, and I would invest as early as I can. Speaking frankly though, I cannot give you any serious figures at this point. But I can tell you that we got inquiries from all over the world, especially from the US, Western Europe and China.
CG: Speaking of our target groups, there are two main kinds of investors. The first type is investors from wealthy parts of the world who are interested in cryptocurrencies as a means to get a high return while at the same time avoiding that their funds flow into projects without a convincing concept. These investors are looking for something with a comparative advantage, and they immediately recognize GBC as an innovative, complex and compelling concept. The second investors are persons (and probably also companies) who usually make their money within very dynamic markets and thereby often have to accept severe risks. These investors tend to come from the emerging market countries and are mostly interested in the stability of GBC.
WW: Exactly! And both target groups find the perfect combination in GBC, as it is a great investment opportunity combined with a high level of security. That’s the best advantage that can currently be offered, and that is what distinguishes GBC from other cryptocoins on the market.
The initial book building has started on April 9 and will last until April 22. Everyone can hand in their order for GBC here: https://www.GBC.is/order