Gold on the Blockchain: The Ins and Outs of Quintric

Let’s break down the mechanisms which will fuel the success of the new Gold Standard

Ever since the meteoric rise of Bitcoin, it seemed that anyone with a few thousand dollars and a heart of gold (pun intended) could launch a successful crypto start-up. Then, considering that most cryptos have no tangible value, the concept of asset-backed tokens was the next logical step. From there, it’s simply a race to see who can provide the most stable asset to lend value to their coins. Enter the 50-odd cryptocurrencies which claim to have precious metals like gold, silver or platinum backing their tokens. You can read more about those programs here: but suffice to say that they all lack several key features, in which Quintic has specialized.

As Quintric’s Pre-sale Promotion heats up in anticipation of the public launch on July 4th, one question seems to keep coming up: Why has no one else done this before? Sure, there are plenty of competitors in the crypto space who have similar business models;

Step 1: Host an ICO
Step 2: Buy or mine gold to back up the tokens
Step 3: Profit

...but Quintirc is unique among the competition. Their tokens are the only cryptocurrency which represents legal money, issued by a national government. The Quint and QuintS tokens are “deeds to legal tender” much like the US banknotes of yore. They are therefore fundamentally different from every other cryptocurrency in existence. While all other cryptos must host an ICO to raise capital for their start-up, Quintric is conducting a Pre-Sale. It may seem semantical, but this is a vital distinction between Quintric and the competition. An ICO is a process exclusive to traditional cryptocurrencies, all of which are legally considered securities. It would be more accurate to call Quintric’s Pre-Sale an LTO - “Legal Tender Offering.”

Now let’s do some math.

  Standard American Eagle Coin vs Proof

Standard American Eagle Coin vs Proof

Quint tokens are currently priced based on US-minted Proof Gold Coins. The retail rate for these coins is set by the US Mint: at present, a Proof Gold Buffalo Coin is priced at $1710 (Fiat dollars) and has a face value of $50 (Gold dollars). When you divide an ounce of gold into 1000 parts, you get $1.71 in paper, or 5 gold cents (one Quint). Each token is simply a convenient denomination of American Gold Dollars, which is both small enough to have utility and liquid enough (by its crypto nature) to actually be spendable. By contrast, physical gold coins are extremely inconvenient to circulate, due to the inability to make change and the fact that most commerce occurs over long distances.

In addition, Quint tokens are not “mined” like a traditional crypto. Rather, they are crested during acquired through an Escrow service, using traditional payment methods such as checks and bank wires. Conversion of other cryptos into Quint is being developed at the time of writing. Once a token is created, Quintric immediately procures gold or silver to pair with said token, using exclusively specie legal tender coinage. The company is then committed to maintaining 100% reserve ratios on all coins in program - that is, there will never be more Quint in existence than there is gold in the vault.

Here’s where a few problems arise. If users are paying $1710 per 1000 tokens, and the gold itself costs $1710 per oz, where is the profit? Furthermore, there is always a storage cost when dealing with any asset, especially gold and silver. Many repositories have annual fees approaching 1% of the total holdings, meaning the value of your precious metals can shrink by a significant fraction over several decades. These are prohibitive expenses for anyone looking to vault gold and silver, let alone a crypto-savvy investor simply looking for a new portfolio piece. To summarize; if Quintric’s token premiums are on par with the value of gold in the vault, where does the surplus capital come from to cover these costs, let alone the company’s overhead?

Many other gold-backed cryptos charge transaction fees whenever their coins circulate. This is fine - assuming they have enough transaction volume to guarantee profitability. Considering how openly speculative most cryptos are, it is easy to imagine such a fragile balance being upset by even the slightest dip in market activity. Quintric will indeed have transaction fees, but that revenue is set aside for another program, which is not so vital to core operations. Some ICO’s promise that their secondary investments will cover vaulting costs, while most make no mention of this problem at all. The nearest sustainable solution can be found with pre-existing repositories who simply tokenize their holdings: presumably, their budgets are flexible enough to absorb any losses if the program goes sour. We suspect that this is the Great Filter of gold-backed cryptos, especially when users have been promised legal tender status for each and every token.

The solution is simple and legally ingenious: Quint tokens are valued at the price of Proof Coins, but the vaulting is done with Standard Coins. Both are legal tender, with equal face value and gold content, issued by the Treasury. Proofs typically cost several hundred dollars more (because of their higher numismatic value), and the resulting profit margin provides more than enough room to cover every cost associated with the program. It also means that Quintric can honor its pledge to maintain 100% reserve ratios of gold-to-tokens without compromising the value of either.

  The price of Quint and QuintS will only fluctuate with the price of Proof Coinage. This give the tokens an amazingly stable value, even when compared to the daily   fluctuations in gold and silver prices on the open market (let alone the notorious volatility of mainstream cryptocurrencies). 

The price of Quint and QuintS will only fluctuate with the price of Proof Coinage. This give the tokens an amazingly stable value, even when compared to the daily fluctuations in gold and silver prices on the open market (let alone the notorious volatility of mainstream cryptocurrencies). 

The actual funds which cover vaulting costs are built into the premiums on each token. After this one-time, up-front cost when a Quint is created, it will never incur another storage expense for its user. Even if your metal sits in the Quintric vaults for 1,000 years, your descendants will still have that same volume to work with (fingers crossed for continued appreciation).

Silver QuintS tokens work in much the same way, in the sense that vaulting is pre-paid. However, they are not pegged to the value of Silver Proof coinage like the Quint are. Rather, they are priced the same as the Quint, meaning that 1/20th oz of Quintric Silver is essentially equal to 1/1000th oz of Quintric Gold. By pricing both gold and silver tokens the same, Quintric is artificially establishing a 50:1 ratio between gold and silver dollars (conveniently mirroring the $50-$1 face values). This stands in contrast to the current free market ratio of gold and silver, which sits around 80:1. This not only makes QuintS tokens more valuable than many other forms of silver, but also keeps premiums lower than they would be if QuintS were priced directly on Silver Proofs (if this were the case, users would be paying almost triple spot price for QuintS). While this marriage of pricing is not a permanent commitment, it makes QuintS tokens a more attractive option for silver investors - no one else will promise indefinite, free vaulting for silver.

Most of the company’s net profit is being set aside in a diversified endowment fund. This fund, known as QuinTrust, is structured in such a way as to provide annual returns which cover vaulting expenses. This is how the company can guarantee “free vaulting forever:” Quintirc essentially owns the vault, and accordingly has very low operational costs. Additional revenue sources are also available, which means that unless the QuinTrust endowment is horribly misappropriated, the company will never come up short on vaulting. Even in the event of a national recession, not only can Quintric comfortably float on these incomes for a very long time, but the Board of Directors is committed to operating at a loss rather than retract the promise of never demanding storage fees from account holders.

In the end, both Quint and QuintS tokens will always retain higher value relative to any other form of gold or silver in the world, because once that vaulting has been prepaid, it will never need to be paid again - plus you can actually circulate the metals as real money. Gold dealers everywhere should be flocking to offer redemptions for Quint into physical metal, because they will recognize the higher value that the crypto-version possesses. Merchants and retailers will be excited to receive gold and silver as payment for services previously exchangeable only for Fiat money. Once you’re in Quintric, it’s entirely in your best interest to remain in Quintric. This is the new monetary system - it isn’t slowing down, and it isn’t going away any time soon.

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