ICON utilises Hedera Hashgraph to achieve the gold standard for security in the field of distributed consensus: Asynchronous Byzantine Fault Tolerance (ABFT). Other platforms that use coordinators, leaders, or communication timeouts tend to be vulnerable to Distributed Denial of Service (DDoS) attacks against those vulnerable areas. Hashgraph is resilient to these types of attacks against the consensus algorithm, and achieves the theoretical limits of security defined by ABFT. Achieving this level of security at a scale of hundreds of thousands of transactions per second is a fundamental advance in the field of distributed systems and it is the gold standard for security in this category.
Many applications require that the consensus order of transactions match the actual order in which the transactions are received by the network. It should not be possible for a single party to prevent the flow of transactions into the network, nor influence the order of transactions in the eventual community consensus. A fair consensus algorithm ensures that if a user can submit a transaction to the network at all, then the transaction will be received by the network and the order in which it was received will be a fair ordering. Hashgraph uniquely ensures that the actual order transactions are received by the community will be reflected in the consensus order. In other words, hashgraph ensures both Fair Access and Fair Ordering.
Formal proofs of the ABFT and fairness properties for the hashgraph consensus algorithm exist and have been available for public review since June, 2016. Furthermore, the hashgraph algorithm has been validated as ABFT by a math proof checked by computer using the Coq system in October, 2018.
Creators and Custodians of Intergenerational wealth readily acknowledge that new statutes and regulations targeting their wealth ensures that Privacy and Compliance are top of mind. There are four states of Privacy including:
In 2010, as part of FATCA, US Congress enacted new disclosure requirements for specified foreign financial assets (“SFFAs”). The types of reportable assets include: direct holdings of stock in foreign entities, interests in foreign funds, depository accounts, custodial accounts, or interests in financial institutions.
In 2018, the CRS was adopted across the G20 requiring the name and identifying number of the reporting foreign financial institution (FFI) as well as the name and the account number, year end balance, address, tax identification number, date and place of birth of each reportable person.
Interestingly, Gold held in a custodial account maintained by an FFI (bank) would be considered reportable, however, Gold held in an independent vault or safety deposit box is exempt from declaration provided (i) the vault is not in an FFI (bank) or (ii) the storage arrangement is not a financial account.
ICON CAPITAL RESERVE SA is not an FFI.
Fibonacci’s Golden Mean is a mathematical formula that permeates the fractal design of our world from subatomic DNA structures the patterns of the stars in the universe. The Golden Mean is embedded in the architecture of our most iconic buildings from the Great Pyramids to Sydney’s Opera House. Since the dawn of humanity, Trusted Sacred Symbols found in places of worship have been generating carrier waves that are literally broadcasting information.
Trust can be traced to the neurobiological activity of our human brain. Our increasingly complex world slows decision making, so we use heuristic defaults like intuition and common sense to help the process. Gold has become the heuristic default for 6000 years because across geography, language, culture and economics, it is the numeraire that the entire world agrees on. Gold is Value.
The stock of Gold refers to the available c200,000MT mined throughout history and the flow refers to the c2,700MT mined annually. Mathematically, Gold has a stock and flow ratio of 1.35%. The stock of our Planet refers to the c7.45b inhabitants and the flow is a net 80m people added per year. Mathematically, Humanity has a stock and flow ratio of 1.20%. As people move up through Maslow’s Hierarchy of Needs, they create surpluses that are stored in a trusted reserve asset like Gold. Hall’s Law suggests that the stock and flow ratios of Gold and Humanity have been correlated for centuries and the ratios are immune to manipulation.
SS: “Brad, it seems that everyone is talking about USD$8000 Bitcoin and wondering if this is a Bubble?”
Brad: “I hear that question quite frequently. Bitcoin (BTC) is clearly in Bubble territory and as Voltaire noted all fiat currencies revert to the mean, which is zero. BTC will follow the trend as it remains a ‘claim check with nothing to claim’, however it may go to $20k first, so if you are a trader, enjoy, otherwise I would advise caution.”
SS: “ICO’s or Initial Coin Offerings ~ Are they a fad or something we need to pay attention to?”
Brad: “Well, in a sense they are both. In the former, you have someone publishing a bunch of future promises in the form of a whitepaper and raising tens or hundreds of millions of USD$ with very limited prospects of creating any future value and in the latter you have some very clever people creating things that will change the world. As an asset class now worth more than USD$200 billion, it does merit serious consideration.”
SS: “You are no doubt from the latter.”
Brad: “We certainly like to think so. (Laughing) I have been working in fintech for 3 decades, in 35 countries at last count, and the ICON team is proven and extremely deep in terms of knowledge, experience and global relationships.”
SS: “Where do AUREALS™ fit in in terms of your career?”
Brad: “The most exciting opportunity I have ever been involved in. You need a compelling problem you are going to solve, a vast and underserved market, an experienced team and, of course, luck and timing and it seems that the stars have aligned.”
SS: “It sounds exciting”
Brad: “Indeed, and perhaps I can offer some helpful context. I was investing in software in San Francisco during the original dot com days when the Internet liberated information in a manner reminiscent of the impact Gutenberg had 530 years earlier. The HTTP at the backbone is a thin protocol where the cost was largely embedded. Andreessen and Netscape created the on-ramps and exited with a USD$12bn valuation. Google was also created at the application level and indexed the Internet of information, today enjoying a USD$720bn valuation.”
SS: Will the next Google be launched on the Blockchain?
Brad: “Absolutely. The Blockchain represents a new protocol that instead of being ‘free’ like HTTP, uses paid tokens like BTC that are protocols for allocating scarce resources. You don’t really need BTC tokens to exchange value and instead, ICON was launched like Google to index assets, with AUREALS™ acting as a gold-based value protocol.”
SS: “Have USD$200bn of these tokens been issued through ICO’s to investors hoping they have part of a new value protocol for the Blockchain?”
Brad: “Yes! Exactly. Bets are being placed on what future money may look like and candidly most of these tokens are worthless. However, some like AUREALS™ may become incredibly valuable, thus becoming the new asset class”
SS: “I understand the excitement.”
Brad: “A growing number of sophisticated investors are coming to a similar conclusion. For us, this journey began almost a decade ago when we discovered how gold underpins the worlds’ financial system and why Sovereigns, Dynasties and Successful Families use gold to protect inter-generational wealth. We researched back to Babylon to understand how ledgers and money were first created and why gold is always re-asserted as the numeraire over time. We carefully studied the work of monetary expert Dr Viera from Harvard who established that the average lifespan for currencies is 27 years and that complex financial systems start with gold, adding debt until they apex and implode, typically every 30-40 years. If you are wondering where we are in the cycle, the Petrodollar was launched in 1973.
“You need a compelling problem you are going to solve, a vast and underserved market, an experienced team and, of course, luck and timing and it seems that the stars have aligned.”
SS: “If 1971 was the end of the last gold standard, would it be fair to say that ICON is offering AUREALS™ now as a new Gold Standard on the Blockchain?”
Brad: “I like your assessment. We began trading physical gold in a company that was ranked as the top new start-up in Hong Kong. We discovered the Blockchain in 2013 and it was an epiphany that led to the creation of ICON CAPITAL RESERVE. We created a minimally viable product to demonstrate AUREALS™ to our UHNW and Family Office private clients. I travelled the globe key-noting Family Office Events and explaining how the convergence of gold and the Blockchain would change everything.”
SS: “What was that like 4 years ago?”
Brad: (Laughing) “Well, to be honest for the first couple of years many thought I had just beamed down from another planet but over the last year that has shifted rather dramatically.”
“They are encrypted and can’t be double spent or stolen. We convert physical gold assets to financial gold assets that can be verified on demand.”
SS: “Can you offer a simple explanation of how AUREALS™ work?”
Brad: I would be delighted to. We have relationships with insured vaults in free zones in places like Shanghai, Hong Kong, Singapore, Dubai and Switzerland where our partners operate a former military facility inside a mountain complete with a private airstrip. ICON is not a bank, so the gold we store is fully compliant and exempt from declaration under FATCA and similar schemes in 109 countries. We store 1-kilo bars and receive safekeeping receipts (SKR’s), which do not involve a change in title. Each receipt details all of the 1-kilo gold bars specifications.
SS: “The gold is secure, discreet and private.”
Brad: “Exactly! We use these SKR’s to create a smart contract called a CINTAMANI™, which in Sanskrit means converting thought energy into gold. Each of these contracts entitles the holder to the physical gold and we register and reserve these on the Blockchain. They are encrypted and can’t be double spent or stolen. We convert physical gold assets to financial gold assets that can be verified on demand.”
SS: “You use the Blockchain as a de-centralized ledger to register and exchange these assets?”
Brad: “That is correct and so it follows that each CINTAMANI™ allows us to create 1000 AUREALS™, which are also smart contracts registered on the Blockchain, as 1 gram financial gold liabilities.”
SS: “How does a private client get AUREALS™?”
Brad: “In seconds they can set up a digital wallet that looks very much like an online banking dashboard but acts like a virtual safety deposit box. We use AI to create an encrypted key to the box and the address is registered on the Blockchain. All of the T’s & C’s & subscription agreements are in the wallet. A software licence is executed and then funds are sent our bank pursuant to a commercial invoice.”
SS: “Clever, so now the private client is simply paying a commercial invoice and then presumably keeps the contract as evidence of a source of funds when they liquidate?”
Brad: “Yes that is an important observation and it allows banking compliance to tick the box on inbound and outbound transfers. We price the AUREALS™ based on 99.99% of spot gold and they are issued into the wallet.”
SS: “So now I have my AUREALS™ what can I do with them?”
Brad: “You can use them as a compliant and exempt store of value that sits outside the banking system. You can exchange them with any other wallet holder and we use the Blockchain to clear, settle and irrevocably register those transfers in 15 seconds. You can literally send USD$100m in AUREALS™ phone to phone, in 15 seconds without going through a bank. AUREALS™ will be bought and sold on various digital exchanges and, of course, at a minimum threshold of USD$1m you can exchange for the underlying physical gold.”
“You can use them as a compliant and exempt store of value that sits outside the banking system.”
SS: “I can see how UHNW and Family Offices might love AUREALS™.”
Brad: “That is true. We also offer a no limit ICON VISA card that can be linked to your wallet. Perhaps you are in Monaco and are provisioning your super yacht. You can use the no limit card to pay for the provisioning and even retire the bill at the end of the month by selling your AUREALS™. Larger families can issue the cards with various limits for principals, children, and staff all under the control of the Family Office. The AUREALS™ can be subscribed for anywhere in the world, transferred anywhere in seconds and then used to effect payments on the VISA. It really is an elegant solution and we are negotiating some interesting strategic joint branding partnerships as we speak.”
SS: “I want to sincerely thank you for your time. Can you share some of the other things you are working on?
Brad: “We expect to launch a scanner that can create a fingerprint for gold bars and also establish the provenance of Fine Art and Wine registered and traded on the Blockchain. Our team is evaluating opportunities that may see us price assets including oil and real estate in AUREALS™ and I invite anyone who would like to learn more to contact me directly at email@example.com. Thanks again, this has been an absolute pleasure.”