Novem, a blockchain-powered digital marketplace for gold-backed tokens, has raised $1.2 million in private investment from gold-industry insiders toward the launch and development of their blockchain protocol and the Novem NNN gold-backed token. So what do precious metals experts see in this new gold-token offering?
Buying and selling gold isn’t a simple process. In some countries with a strong interest in gold, such as India, a lot of demand cannot be met due to regulations on importing and exporting gold.
Digital blockchain protocols offer a new way for gold to be traded and valued, where the buyers’ physical locations have no impact on the price they pay for gold assets.
Transparency in gold assets
Since the 1970s, there have been rumors about Fort Knox being empty of gold. The gossip got intense enough to erode confidence in U.S. gold holdings. Journalists were led into the vault and shown the enormous stash of gold bars in order to restore confidence with the public.
For thousands of years, gold has held value and as one of the few “Noble Metals” has many useful properties. This is why governments and wealthy individuals often hold a lot of their asset value in the form of gold. Since these assets are highly valuable and must be accounted for, transparency is a critical element of the storage process.
An idea behind the Novem service is to increase transparency for gold assets by decentralising ownership of the digital asset (tokens) with regular third-party audits of the physical asset (gold bars in a vault).
One of the early pitches for bitcoin was to think of it as “digital gold.” This concept has not been borne out due to extreme fluctuations in bitcoin’s price.
If anything, it could be said that utility tokens have been the opposite of gold. They have been extraordinarily volatile in the decade since their introduction. The only exception to this rule has been asset-pegged stablecoins, such as the Tether token, that are designed to keep an even value based on an external asset, such as the United States Dollar (USD).
Novem is designed with this idea in mind, pegging the asset to an amount of physical gold at a rate of 100 NNN gold-backed tokens per gram of gold. Proponents of stable coins say that using a solid commodity like gold is even better than using fiat currency as a peg. Detractors say that it’s better to simply buy real gold and have it within your own physical possession.
If nothing else, the existence of gold tokens makes it easier to simply buy and sell gold on demand, as cryptocurrency tokens can be bought and sold through almost any computer or mobile device.
Built on NEO
There are many blockchain protocols that allow organizations to create new tokens. Ethereum, Waves, and Stellar are three examples. Novem chose NEO as the foundation for their NNN gold token.
NEO is the 16th most valuable blockchain as measured by the total value of the tokens on the network. That market cap is over half a billion USD as of February 11th, 2019. The stated goal of NEO is to create a “Smart Economy” via blockchain technology, using smart contracts to facilitate new value in the digital space.
The specifics of each protocol for launching tokens can be hard to understand for those without deep technical knowledge. NEO’s credentials are best summarised by its status as a top-50 protocol with a years-long history of successful operation.
Is the future of gold digital?
As time goes on, more and more of the world’s economic output is being channeled through the internet. Digital retailers have replaced a staggering amount of physical retail shopping, with Amazon alone taking in over $200 billion in net sales in 2018.
Gold is an odd fit for a centralised digital retailer, but it’s a great fit for a decentralised protocol. Novem aims to bring this technology to market and with $1.2 million in funds raised for the project, they are well-positioned to make it happen as they enter their public sale.