The gold storage company Anthem Vault is to create a new digital currency.
Bitcoins turned out to have no difference from flat currency as their value is not backed by anything real. Instead, it is dictated by confidence and belief.
The new cryptocurrency is intended to be backed with precious metals, namely gold. Each "coin" will be valued at 1 gram of gold, and will be called "Hayek," after Austrian economist Friedrich Hayek. The release is reported to be on May 25th.
Anthem Vault CEO, Anthem Blanchard believes that the alternative payment system would be helpful for people in developing countries with volatile currencies. "They could pay each other with the equivalent value of gold, if they each had Hayek coin wallets".
The other use case, he said, is if there is a massive distributed denial of service attack on the modern financial system.
"Talking with friends of mine in the intelligence agencies, they say this is a real threat," he said. An attacker (he used the Russians as an example), "could create a massive DDoS attack, make the system inoperable. Ultimately this is how we rely on our payments."
There's a decentralized system of confirming that a payment has been made, so systemic failure is theoretically impossible.
This alternative to the volatility and vulnerability of central bank issued currencies, could also add advantage of making precious metals more versatile on the global marketplace, since physical delivery is not required.
Anthem Vault has yet to say whether or not you'll be able to cash in your digital coins for gold. If they did, it would create a system of checks and balances between themselves and the customer. They would have to keep a large amount of gold on hand, or else their currency will be worthless if too many people withdraw.
Also read: Bitcoin gives US dollar good virtual punch
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