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Richard Verkley - on How Blockchain Can Ensure the Security of Gold Investments

HOUSTON, TX / ACCESSWIRE / April 25, 2018 / When Bitcoin exploded onto the global scene in 2009, the novelty and the possibilities associated with the concept of cryptocurrencies initially eclipsed the underlying technology. Digital coins have since polarized the financial world, some declaring them the money of the future and the "new gold" and others seeing cryptocurrencies as nothing more than a fad and the latest toy for speculators. On the other hand, the technology underpinning virtual money has come to be regarded as the element with true potential to revolutionize financial transactions and records. Blockchain, also known as distributed ledger technology (DLT), eliminates the risk of data loss or manipulation, ensures transparency, and guarantees traceability. Given the importance of gold as a store of value and the unflagging interest of investors in this commodity, it is hardly surprising that participants in this market were among the first to recognize the potential of blockchain and adopt the technology, explains veteran entrepreneur and noted philanthropist Richard Verkley.

Investors can get access to the gold market through a variety of derivative vehicles, some examples being exchange-traded funds (ETFs), mining shares, and futures options. It appears that these so-called paper gold investments offer an affordable substitute to owning bullion, but experience has shown that such holdings provide little security if any at all. The paper gold market has long been burdened with over-leverage and has historically been vulnerable to fraud. Investors in gold ETFs, for example, not only have no claim to the physical gold backing the shares, but they are also exposed to counterparty risk at all levels of the custodian chain. Ownership of bullion is the only way to ensure the safety of gold investments. With the emergence of the blockchain, transparency can be taken to a whole new level, Richard Verkley points out. Besides transaction data being recorded in perpetuity and immune to unauthorized changes, DLT also ensures transparency of provenance, proof of reserves, and clarity over pricing. Unlike all other means of trading gold, blockchain brings together all parties concerned: miners, wholesalers, financial institutions, traders, and investors.

Besides eliminating the risks associated with gold investments, DLT also creates new opportunities for buying and trading bullion. Last year alone, several major projects were launched, and news of pilot programs continue to pour in. CME Group, one of the largest exchange operators in the world, partnered with the Royal Mint to create RMG (Royal Mint Gold). As explained by CME digitization chief Sandra Ro, "When you purchase RMGs you will effectively have real gold that is allocated from a direct ownership standpoint that is completely reserved – there is no re-hypothecation, there is no lending on that gold, there will be enough physical gold to represent all the RMGs that are issued." Euroclear joined forces with blockchain startup Paxos and a group of major banks to develop a gold trading platform that would ensure faster and cheaper settlement for unallocated gold on the London bullion market.

Richard Verkley is the CEO of Farpoint Metals & Mining, an environmentally friendly mining company focused on gold. Already one of the leading figures in Ecuador's business community, he has also become widely acknowledged as a passionate philanthropist through The Heart of Gold Foundation. The renowned entrepreneur offers video courses for business newcomers, focusing not only on skills and strategies but also on green and sustainable practices through his latest venture Eco Metal Recovery.

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SOURCE: Richard Verkley

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