Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Is the GoldMint Cryptocurrency for Real?

GoldMint (GOLD); or GoldMint (MNTP), is a potentially innovative cryptocurrency with an interesting marketing strategy.

The funds held in the GOLD ERC20 Token (Ethereum-backed) token are secured with physical gold and gold-delivery futures. The futures trade on the Chicago Mercantile Exchange (CME), the London Mercantile Exchange (LME) and Singapore (SGPMX) exchanges.

A delivery future is a contract to buy gold at a price based on an exchange purchase. The obvious intent of the GoldMint platform is to create a blockchain based futures market for gold.

Long-term plans at GoldMint include building the GoldMint Blockchain. The Goldmint will serve as a trading platform for the MNT proprietary token. The MNT token will verify transactions of GOLD. Individuals could make money by mining MNT.

The MNT is a proprietary token that trade only in the GoldMint Platform. GOLD is an ERC20 token that trades in the wider cryptocurrency market.

GoldMint (GOLD) is Backed by Physical Gold sort of

US Federal Reserve Branches in New York and Chicago store the physical gold. GoldMint reportedly has other storage facilities in Singapore.

Therefore, GOLD is the cryptocurrency equivalent of a gold based exchange-traded fund (ETF). That means GoldMint (GOLD) is like the SPDR Gold Shares (NASDAQ: GLD). Gold held in vaults backs the SPDR Gold Shares. The GLD ETF was trading at $112.97 on August 12, 2018.

Investors must view GoldMint and GOLD as futures not as precious metals. The idea is to base the futures upon a liquid and convertible asset. Physical gold is being used because it is a well-respected asset people have faith in.

GoldMint is a gold-based Lending Platform

GoldMint is trying to solve a problem inherent to physical gold and a problem inherent to cryptocurrency.

The greatest drawback to physical gold as an asset is that it is almost impossible to spend anywhere in our modern world. You cannot take gold down to Kroger and buy food for your family with it. That means gold is an asset and not money.

The GoldMint platform aims to rectify that problem by allowing people to borrow money against gold and gold delivery futures. GoldMint is building a Custody Bot vending machine that will make peer-to-peer (P2P) loans backed by gold.

Theoretically, this would let a person holding physical gold borrow money against it. A gold investor that ran out of cash or lost her job would use the Custody Bot to borrow money to pay bills or invest in a business.

An interesting way to think of GoldMint is as a blockhain based pawn shop for gold. Like a pawnbroker, GoldMint is a hard money lender that makes loans based on physical assets.

How GoldMint (MNTP) Provides Liquidity

The cryptocurrency problem GoldMint is trying to solve is liquidity. Many cryptocurrencies lack liquidity because they are hard to convert into fiat currencies (paper money).

GoldMint offers a solution to this dilemma by linking an ERC20 token to a gold future. The idea is to give cryptocurrencies, an intrinsic value, so people will accept them as money.

This concept is hardly new; paper currencies like the U.S. dollar and the Pound Sterling were originally gold-backed. That is people could theoretically take the bill to the U.S. Treasury or the Bank of England and trade them for gold.

Gold-backed money was a huge success because most people accepted it. Eventually, people kept accepting the money even though almost all countries abandoned the so-called Gold Standard.

Another solution to the liquidity problem is Bancor’s (BNT) token which makes it easier to convert one ERC20 token to another. Interestingly, GoldMint and GOLD are part of Bancor’s liquidity network.

Is it a Cryptocurrency or a Future, an ETF or a Stock?

GoldMint operates more like an ETF than a typical cryptocurrency. It publishes a quarterly report like a company and calls itself a cryptoasset.

A long-term plan is to float a GoldMint stock on markets in the United States in Canada. Therefore, GoldMint is actually an exchange-traded fund that operates partially on the blockchain.

If these plans come to fruition, GoldMint will be a hybrid ETF backed by cryptocurrency, gold, gold futures and lending. That would be a risky investment because it is unprecedented and unproven.

I have to wonder if regulators like the Securities and Exchange Commission (SEC) will allow it. A potential danger here is that equities like GoldMint would expose people’s retirement savings to cryptocurrency market volatility.

Some Potential Market Dangers from GoldMint

Such exposure might occur because retirement funds might buy GoldMint stock. Another danger is the exposure of investors to the gold market which can be unstable.

Gold is both a mineral and a commodity. An inherent danger in gold is that prices will get high, which will motivate miners to dig more gold and flood the market. That would cause the gold price to collapse.

Companies do not mine a vast amount of gold because it is too expensive. High gold prices would make it profitable to mine that gold.

Is GoldMint a Good Cryptocurrency?

Confusingly, our friends at CoinMarketCap label the GoldMint (GOLD) token GoldMint (MNTP). I imagine they do this to avoid confusion with Bitcoin Gold (BTG).

The GoldMint MNTP was fairly cheap with a Coin Price of 28.7¢, a Market Capitalization of $550,555, and a 24-Hour Market Volume of $24,479 on August 12, 2018. There was a circulating supply of 1.915 million MNTP and a Total Suppy of 10 million MNTP on the same day.

Intriguingly there are four GoldMint tokens liked at the Bancor Network’s website. Those tokens are GoldMint Relay (GOLDBNT), Goldmint (GOLD), GoldMint Relay (MNTPBNT) and GoldMint (MNTP). Only the MNTP token is circulating.

This means that GoldMint has the infrastructure for large-scale expansion in place. It is an interesting cryptocurrency with some good possibilities.

A good way to think of GoldMint is as a financial technology company. That financial technology utilizes gold, and it is unproven.

A potential value at GoldMint is futures, blockchain, cryptocurrency, and lending technology that can be applied to an asset. For example cryptocurrencies based on oil, silver, or even real estate. That might be worth a lot of money someday because speculators would love it.

GoldMint is not linked to the Price of Gold

Strangely, GoldMint does not link the MNTP token to the price of gold. A troy ounce of gold was trading at $1,215.60 and a gram of gold was trading at $39.08 on August 12, 2018.

Currently, GoldMint is a speculative investment based on the potential of its technology. It will be several months or longer because it launches gold-backed cryptoassets.

I’ll be watching GoldMint to see if this startup can really offer gold-backed cryptoasset. If GoldMint can created cryptoassets it might make a lot of money. Until then, GoldMint is just a modest cryptocurrency with some interesting plans.