Atkinsons Bullion & Coins
Back to July 2017

The term ‘BullionCoin’ is starting to be used more and more frequently; as such, we have directed our attention to this ‘new’ form of money (I will return to why I positioned the word ‘new’ in inverted commas later), to explore what BullionCoin entails.

As a trusted and longstanding form of money, that has been used throughout multiple civilisations and lasting for over 5,000 years, gold and silver have proved themselves as being good, solid forms of money; therefore, it seems sensible to continue to use them.

However, it’s 2017, and we are well and truly immersed in a technological revolution, with latest technological advances being able to offer and do incredible things. To ignore the power and opportunity that technology could bring, arguably could be a disaster.

Digital currencies have reportedly surpassed $100bn USD in market capitalisation and are said to be doubling in size every 3 months.

Would it be a smart idea to mix the two?

The BullionCoin Exchange (BCX) and the Allocated Bullion Exchange (ABX) seem to think so, as they have made it their mission to unite physical precious metals and global financial markets, by using the latest digital blockchain technologies.

The result, BullionCoin!

To summarise, BullionCoin is what you get, when you back new digital currencies with physical gold and silver.

Finer Detail

BullionCoin is not a fiat currency, but instead is a cryptocurrency that is fully backed by the precious metals.

Each BullionCoin is a redeemable electronic Bearer’s Title of Ownership to the precious metals that are backing BullionCoin. The investors that hold the redeemable BullionCoin can trade them with the Bearer Titles, in the exact same way that unpacked fiat currency is traded.   

Below is a simple overview of the whole BCX and BullionCoin process taken from GoldVu Bullion:

1.    Primary market participants buy physical precious metals at the wholesale contract rates & hold Title of Ownership.

2.    Those participants then authorise BullionCoins to be created/minted against their precious metals

3.    Minting / creating BullionCoins is just a process of digitisation of the Title of Ownership to that metal

4.    Primary market participants then sell those digital coins into the secondary (retail) market

5.    That sale, is the selling of the Title of Ownership from the primary market participant to multiple retail investors

6.    The digital coins that those investors now hold, act as an electronic Bearer’s Title to the physical gold & silver that’s backing BullionCoin.

7.    Coin holders can use them in transactions and trades, in the same way that you use fiat currency

8.    As the coins are electronic Bearer’s Titles to the physical precious metals backing them, investors holding those coins can then redeem them at any time in exchange for the equivalent quantity of physical gold & silver that those coins represent

A Scary Prediction?

Wait, haven’t we seen this idea of BullionCoin somewhere before?

If you type into Google ‘The front page of the Economist 1988’, you will be greeted with the image of a Phoenix bird with a large round gold coin dangling from its neck. The year-date on the coin is 2018 (30 years after publication), with fiat currency on fire beneath its wings.

Is it possible that the economists of 1988 managed to achieve a rather accurate prediction for the future of money, or has this ‘new’ form of money been part of a larger long-term plan?

You can now see why I used the word ‘new’ in inverted commas earlier, as it is unclear just how ‘new’ the concept BullionCoin really is…

Advantages of BullionCoin

To invest time and money into BullionCoin, there must be advantages to doing so. We take a look at some of them:

  1. Transactions are to be performed using Peer to Peer networks, meaning that BullionCoin will not be reliant on banks and their opening times. A 24 hour service will be available.
  2. Building on bullet point 1, the setup of BullionCoin means that during public holidays, buying and selling of the precious metals can still take place.
  3. BullionCoin bypasses any banking system and allows investors to trade freely between one another.
  4. Should the financial markets and banks freeze entirely, BullionCoin will still operate. You can transfer your bullion into the BCX and continue with your everyday transactions.
  5. BullionCoin has the advantage of technology, which will allow it to evade any prevention of hoarding money.
  6. Today’s banking system is starting to look a little dated; however, the technological advancement of BullionCoin is that it can avoid slow transfer times, transfer feed, frozen accounts and international sanctions.
  7. If there is a huge financial collapse, the fact that BullionCoin is backed by real gold and silver, means that there may always be the option of obtaining a tangible asset.

Disadvantages of BullionCoin

  1. Reliance upon the internet for BullionCoin is problematic. The internet can experience disruptions. If the system was to go down or be abolished altogether, would records of ownership of the BullionCoin be lost forever? How could you prove you were owed the tangible asset?
  2. Digital currency tied in with gold may drive up costs. Automated systems could be expensive. Equally, manual labour to run the process of BullionCoin could also be expensive.
  3. Needs a lot of trust. It is a new concept; thus, scepticism is natural and no doubt high.
  4. Linking to bullet point 4, it needs to prove itself and stand the test of time. At this point, no-one really knows if the concept of BullionCoin will work properly.
  5. Much like the fiat currencies themselves, they act as a promise that you can use BullionCoin to get the physical asset. What happens if that promise was no longer honoured?

What do you make of BullionCoin? Is backing a cryptocurrency by gold and silver a clever move, or could it turn out to be a disaster?

Why not just buy the tangible precious metals yourself and know for sure that you have it under your own control and at your own disposal?

Is there something unnerving about placing so much control into BCX and ACX and the internet? Or should we have more faith in the power of technology and the possibilities that BullionCoin poses?

Let us know your thoughts in the comment section below. 

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This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.


9 Comment(s)

How can you trust anything on the internet things can dissapere in the blinking of an eye, if they can hack into big companies and goverment they can hack into your computer.
The main problems I have with bullioncoin are ;-
1. The price of gold, and therefore the value of bullioncoins, will still be manipulated by the paper gold market price riggers.
2. The spread pricing from spot of gold is to high and gives instant loss on take-up.
3. Each Gram of gold held is attributed to a particular holding, if any theft was involved (physical or digital) it would be to that holder not spread among all holders.
4. If the specific coin created from my holding is not constantly traded, but held in an account, it does not earn a yield.
For all that I think it is a good concept and if the paper gold con can be eliminated I would be happy to give it a try.
i heard about BullionCoin a few months ago through Andrew Maguire and the Allocated Bullion Exchange. For those who have traded gold and silver through the Allocated Bullion Exchange there is nothing that different.

Investors buy gold or silver and it is held in the ABX vaults at which ever of the hubs they bought the metal at. The metal has to be in the ABX vault at that hub to sell, so if there is an internet breakdown, your metal is still in the vault. You can leave it there but if you wish you can have a blockchain title of ownership created which is BullionCoin. One BC Gold is 1g of gold and one BC Silver is 50g silver.
These can be sold into the secondary market or not. If you sell your BullionCoin you sell your metal. The cash returns to your account. You can buy more metal or not. As creator of the BullionCoins you receive part of the transaction fee levied when BullionCoin changes hands. This will last until the BullionCoins you created are extinguished when the physical they are title of ownership is withdrawn from the ABX vault.

You buy gold on the ABX, create BullionCoins, sell them on the secondary market, get the cash back and withdraw it. You still be entitled to an income from the coins you created each time they change hands.

As a creator of BullionCoins is a bit of a no brainer.

As one of the most respected jewellers / bullion dealers in the Country in my view, you are well positioned to take advantage of the possibility of being a fully fledged merchant of BullionCoin. You would have the very best of both world's of gold-backed crypto and physical bullion. It's what I would be considering if I had a business like yours. It's quite obvious that blockchain technology is the future, and gold (and pm backed crypto) is the future of money.

You might likely be aware also, that there are others that are about to hit the market shortly, such as Anthem Blanchard's Anthem Gold, OneGram and also the Royal Mint's very own RMG (from their website: "RMG (Royal Mint Gold (RMG®) - The New Digital Gold Standard"!

One thing is certain, as the 1988 (Rothschild Owned Economist foretold) there are big changes ahead involving the blockchain and gold backed currencies. The Phi on the gold coin round the Pheonix neck refers to the greek symbol for the Golden Ratio and the 10 probably refers to ones and zeros, which is binary code, meaning technology. Combine the two in 2018, and what do we get? Gold backed cryptocurrency.

Just a thought.

@ By t shead

SIMPLES!!!.. Tell them you spent the vast majority of it on Wine, Women & Song (& the rest you just wasted)
Good piece on BullionCoin.

I would say on balance, the advantages of BCN (BullionCoin) outweigh the disadvantages. Holding a good balance of both physical metal and having an allocated account in another Country such as on the BCX makes good sense to me.

Also, one of the criticisms of Cryptocurrencies has been that they are just like fiat in that they are not backed by anything tangible. BCN addresses this point wholeheartedly by backing your BCN with audited physical metal.

It won't stop me buying physical, it just means I'll be allocating part of my holding in digital form.

Another point worth mentioning is that in the event of a forthcoming economic crisis (a 100% certainty), that might likely involve bank bail-ins, bank-runs, bank bankruptcies, what are you going to do when you are unable to access your fiat cash? It's doubtful if you could take your gold and silver coins and spend them at the supermarket. At least with BCN you will have an option of being able to send funds immediately that are fully backed by PM. I know that will likely take a while for people to catch on, but in my view it's a step in the right direction.

Anyway, that's my take on it.
And if a couple of the things in the Advantages and Disadvantages list were to happen at the same time, you would have nothing. Still far better to have physical ownership and in your hands. Crypto's of any kind are unregulated, you have no guarantee of actually getting anything for your funds. It's a huge risk.
I have been inspired by the blog and became excited that a coin was going to be launched.

The secure blockchain ledger and cryptography would ensure the smart contract would be time stamped and authentication of ownership...just like it took us over time to have a paradigm shift from gold and silver to trusting fiat currencies...which have ultimately goes to zero...

I hear that a middle eastern country has considered a coin/token backed by gold or silver. ..

Interesting times..
Its funny I was looking at this company in the channel islands?
You see the deep state run the show, and you have to sus what these gangsters are going to do, and then there the old adage if you can't touch it you don't own it.
This is the problem I have at the moment I own two miner stocks in gold and silver, they are priced in Canadian bucks, if the show goes down, all the currencies go down, which they will, what happens to my shares?
They bring in the sdr which is another con, run by my old mate Rothschild and his band of merry gangsters, what happens to my shares, Paul maybe you can answer?
Another problem I have a paper trail to you owning precious metals, you would have to tell the powers to be if they want to take it off me, desperate governments or should I say idiots, do desperate things.

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