Justin's note: Yesterday, Doug Casey, Rick Rule, and Nick Giambruno showed us the massive potential of gold-backed cryptos. If you missed it, catch up here.
Today, in part two of their discussion, the guys take a closer look at this new digital asset…
Nick Giambruno: Doug, I personally believe there will never be a gold-backed crypto that can completely stand in for gold. There is simply no substitute for owning physical gold that you can readily hold in your hand.
However, owning large amounts of physical gold presents its own challenges. It's hard to store securely, move long distances, and break down into smaller amounts. A gold-backed crypto can help address these drawbacks.
That said, any gold-backed crypto will inevitably have some counterparty risk. Physical gold in your direct possession does not.
Instead of being a substitute for owning physical gold in your own possession, I believe gold-backed cryptos are a complementary tool for individuals all around the world to access sound money.
What's your take?
Doug Casey: I agree, Nick. You want both. The reasons why cryptos are catching on in the developed world are pretty obvious. We don't need to go on about that here. I think the real future for cryptos, and this is especially true of gold-backed cryptos, is going to be in the Third World, because 75% of the people on the planet have to use toilet paper currencies – like the Zambian kwacha, the Argentine peso, or the Venezuelan bolívar – that have little value within their countries of issuance and no value at all outside of the borders.
Third World people tend to understand gold. It's tangible, it's more understandable than just the idea of a cryptocurrency. If they see a crypto that represents gold, in addition to its other advantages, it's likely to catch fire. People in Third World countries desperately need a currency that allows them to save and transfer wealth reliably. Something of real value, as opposed to just some locally issued government toilet paper. Cryptos in general, and gold-backed cryptos in particular, are a wonderful innovation not just for us but for the impoverished 75% of the world's people who live in blocked currency countries.
Nick Giambruno: Exactly… why would anyone abandon their wealth to a constantly depreciating government fiat currency, sitting in an insolvent fractional reserve bank when they can easily save a gold-backed crypto?
On that note, how does a gold-backed crypto help one with political diversification? Is it a new tool in the toolkit?