We live in a world that is rapidly transitioning to digital currencies. Facebook’s Libra was a high profile early initiative from the US, but China was fastest out of the blocks with its Digital Yuan and many countries are now beating a path to launching their own central bank digital currency or CBDC.
Simultaneously, the world is growing weary of the US dollar’s preeminence as the global reserve currency since the US now habitually abuses this privilege by printing dollars to keep its economy going. The wealth devaluation and destruction that this brings will have a severe global economic impact to many nations.
A multi-reserve currency system is the future and it is imperative that gold participates given its status as a store of value and investment vehicle for so many globally.
The World’s gold is also being tokenized through a mixture of national initiatives together with several notable corporate “private” initiatives premised on a fundamentally flawed construct. Gold is naturally different from CBDCs as no-one can really claim to be the central repository of gold globally.
We think this unnecessarily disadvantages gold to the detriment of the millions who value gold as an often primary store of value. This means that gold needs a mechanism to simulate a central bank environment. We want to see a decentral bank for gold and we believe that it can take the form of a smart contract.
We have called it ERCAU.
ERCAU is an Ethereum smart contract designed to act as a gold tokenization service by integrating local partners throughout the world that can store gold securely and verify this onchain. This is done to allow ERCAU to issue digital tokens straight to the owner’s Ethereum wallets. The owner could be an individual, institution or even a central bank but they each benefit from the same thing — their gold is now in a liquid, tradable, divisible and exchangeable format.
Owners can retrieve their gold by repaying the smart contract with gold tokens, which are then burned when the blockchain is updated with a record of the physical gold having been collected by its owner.
And this where ERCAU’s two killer attributes appear:
- ERCAU allows owners to repay with other ERC20 gold tokens. In fact, it levies a lower fee if they do so. This destroys competing gold tokens by taking them out of circulation and reducing their liquidity. These tokens are permanently removed from supply by ERCAU leaving their issuers with the carrying cost of the physical gold that they secured in order to mint their tokens.
- ERCAU partners release the physical gold to its owners whenever the smart contract has been refunded and fees paid. There is no additional administration. In theory, every gold owner in the world could — constrained only by Ethereum’s network speed — redeem their physical gold from the local partner all at once.
Welcome to ERCAU — we look forward to walking this journey with you.
We are at https://www.ercau.com
We launch via https://medium.com/degen-vc through an airdrop to the #degenhorde on 10th September 2020.