ICO’S and the Bitcoin Bubble – What Happens Next?

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 brad@icon.gold. Thanks again, this has been an absolute pleasure.”