Using Gold As A Method of Paym

Using Gold As A Method of Payment

As this chapter notes, gold has been used as a currency or method of payment for centuries. However it has always been inconvenient to make very small payments using gold, though people through the ages have tried. For example, many old gold coins are “clipped,” where a certain amount of gold was clipped or removed from a gold coin, to create a smaller price in order to make a payment.
A Toronto-based company aims to change this. In 2014, BitGold was formed as a company that promoted the buying and selling of smaller quantities of gold, using gold as a method of payment, and storing gold. All of these transactions would take place electronically. Despite the unfortunate choice of name (people have confused the company with Bitcoin, which has had a notorious past in its rise to become a global currency), BitGold quickly found itself operating across the world. Part of its quick rise to success came from a steady source of initial funding: from the Soros family and from a few Canadian Pension Plans.
In 2015, the company acquired Goldmoney Inc. and rolled its operations under this one banner. Today in early 2017, the company has just under 1.4 million customers holding $1.37 billion in assets in over 150 countries. The company’s mission is “to provide secure and accessible gold-based savings to everyone, while also making gold useful for everyday payments. Goldmoney helps people around the world build and protect their savings, transfer value instantly, and empower their business with the tools they need to succeed.” In early 2017 the company announced that its products achieved recognition as compliant with the new Shariah gold standard established by the Accounting and Auditing Organisation for Islamic Financial Institutions, AAOIFI, in conjunction with the World Gold Council. This can be expected to broaden the use of gold in the Muslim world in the future.

Questions

1. How can Goldmoney continue to grow in the future? Are there other products they could offer?

2. What type of company is Goldmoney or what type of company could it become? Currently in Canada it is regulated as a Dealer in Precious Metals. But could it become a bank? A money transfer service like Western Union? Could its products become a form of currency like the U.S. dollar?

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