Jump to content
Sign in to follow this  
drbubb

BitGold / Goldmoney : Can the merger work? Will it work?

Recommended Posts

BitGold / Goldmoney : Can the merger work? Will it work?

 

There are some genuine questions about the business model,

but the company seems to have established some decent momentum

 

(Later, there was a merger of Bitgold, with the Goldmoney storage business.)

 

CA:XAU / Bitgold (on CVE) ... update

XAU_zpsffc62lun.gif

 

article:

Spinning gold into dollars: how BitGold intends to become a new standard

One of the financial world’s newest innovations – digital currency – has run full tilt into one of its oldest concepts, gold as a medium of exchange

 

When Josh Crumb and his colleague started out, they just wanted to figure out a way to allow people to pay for a cup of coffee with gold. Yes, you read that correctly. With gold

...They’ve already married gold and the dollar, in what Crumb describes as “a personal gold standard”. The Toronto-based company’s product is simple: it offers clients the ability to deposit gold in their BitGold accounts, and then use those funds (or their value in their local currency) to make mortgage or car payments – or simply to pay for a coffee.

 

Essentially, in BitGold, one of the financial world’s newest innovations – digital currency – has run full tilt into one of its oldest concepts, gold as a medium of exchange. The idea for the latter probably predates recorded history, while digital currencies are in the midst of radically redefining the very meaning of the concept, and in the very earliest stages of what could prove to be an enormous shakeout in the way global financial systems function today.


Bitcoin is alluring both to those who suggest that cash is dead and the future of currency is digital, as well as to libertarians who would prefer that their financial transactions remain well beyond the eagle eyes of annoying government agencies. Its early years have been bumpy – the Mt Gox clearinghouse for the digital currency went bankrupt after cyberthieves made off with some $500m or so of clients’ assets – and its long-term fate remains uncertain. After all, it’s an entirely new concept, and its valuation (in dollar terms) has been tremendously volatile. If your boss still insists on paying you in dollars, and you decide to convert them to bitcoins, and then try to live entirely in the bitcoin economy, you shouldn’t expect everything to work as smoothly as it would if you had a conventional Bank of America checking account.

 

But what BitGold is up to is something rather different. Don’t let the moniker fool you, says Crumb; he’s not trying to turn gold into bitcoins. “We think that’s a bad idea.

That being said, it’s still a next-generation banking concept, and one that relies on some of the same concepts as does bitcoin, or other digital currencies. “It works like a bank, but it’s gold,” says Crumb, who has a background in metals trading and investment banking. The similarity to bitcoin, or any other digital currency, he says, lies in the fact that clients can hold whatever they want as ‘money’ – in this case, gold. “As long as you can pay Starbucks, or whoever, the US dollars, or whatever currency they require at their cash registers or point of sale terminals, that’s fine.”

 


And it’s BitGold’s job to make that connection, spinning gold into dollars, rubles, yen, or whatever else its clients want. Those clients may like to view their gold as money, but since Starbucks doesn’t share that opinion, BitGold will serve as a facilitator, accepting the client’s gold deposits and then, when the client wants to make a purchase, turning it into the local currency – a Brazilian real, or Japanese yen, or Russian ruble – at whatever rate the prevailing price of gold on the global market dictates.

US the next frontier?

 

Except, that is, for US dollars. So far, the Canadian startup hasn’t tried to launch its business in the United States. “It would be incredibly complex” from a legal and regulatory standpoint, Crumb says, although he argues that all the financial backing within Silicon Valley of bitcoin eventually will pave the way for the acceptance in the United States of all kinds of new banking models. “We don’t want to fight those battles, but a lot of the clarity we need is coming,” he adds.

 

Not that BitGold is going to sit around and just wait for that to happen to tackle what could become its largest market: the United States, stuffed full of gold bugs just like Rand Paul. Only last week, the Canadian company snapped up the operations and intellectual property of Goldmoney.com, agreeing to pay approximately $49m not only for the latter’s gold vault storage business, but also for its toehold operating in the United States. With relationships already established with major bullion-dealing banks, Goldmoney’s existing business, Crumb figures that BitGold could be in a position to roll out its offerings in parts of the United States “within a few months”.

==

> more: http://www.theguardian.com/money/us-money-blog/2015/may/31/bitgold-new-standard-digital-currency

Share this post


Link to post
Share on other sites

From Erewhon :

photo-thumb-3288.jpg?_r=1400319011

> http://www.greenenergyinvestors.com/index.php?showtopic=20023&page=7

 

Paul Tustain's criticism of the business model.

 

 

So instead of combining financial strength for the two businesses going forward, the effect of the asset strip on GoldMoney is to reduce the capital buffers down from £20.5m to £9.5m across both GoldMoney and BitGold businesses. With 870 tonnes of customer metal to look after, and bold investment and expansion plans for BitGold, this is seriously light on capital.

Bitgold expansion plans
Those BitGold expansion plans need a closer look too. BitGold is a brand new 'development stage internet technology business' (see the BitGold: Listing Application, TSX Venture Exchange, 8 May 2015) with a remarkable stock market rating.
Its CEO, Roy Sebag, has brought with him laudable enthusiasm for gold, and bitcoin, and heaps of financial talent, but his company appears to be planning to offer an amalgamation of three ideas, one of which has long been done cheaper elsewhere, by companies with a much more solid base than he can offer, and two of which have already failed.
  1. BitGold offers you the chance to buy and own gold. According to the BitGold website the net round-trip cost, in and out of gold, is 2%. This is not exceptional value. BullionVault's gold round trip costs 1%, and that reduces fast above $75,000. (I am still unclear on BitGold's storage fee proposition and how it will work for GoldMoney users in the long term).
  2. BitGold also anticipates you will use the service to deal in gold, currencies, and bitcoin. The problem with this trading idea is that it has been tried very recently by Netagio – then a subsidiary of GoldMoney – and it failed. We gold owners are a fusty lot, and after 4 months Netagio had little customer interest. Originally financed by GoldMoney and launched in summer 2014 the service was quietly closed in February 2015.
  3. And finally BitGold believes you will choose to make gold backed payments, or even go shopping with a special Visa card, both of which will deplete your gold holding as you spend. GoldMoney itself (again) tried providing a pay-with-gold function, and gave up when they came up against the practical truth of Gresham's Law: "Bad money drives out good" (from circulation).
What Gresham's Law says is that it will be a long uphill struggle persuading people both (a) that gold is better than dollars (or bitcoin) for storing the value of your savings and ( b that once you have finally agreed, and bought gold, you should spend it! This is a contradiction. And on top of that it seems there's an extra 2% fee if you use your BitGold Visa card. Is this really what gold savers want?S

Share this post


Link to post
Share on other sites

(My reaction was):

 

wow! that's pretty negative, and it is not easy to refute those points

 

I had the same reaction - that their transaction costs were too high (!!)

 

I met the two founders of Bitgold in HK and told them what it cost to buy and sell and ounce of Gold at Hang Seng bank

in HK - its about $6, versus $24 at Bitgold. When I told them that, and saw how they reacted with disbelief, I lost interest

in investing in their project

 

(here's what Dominic Frisby said):

 

Subject: This bitcoin company might have tonnes of gold now – but you still shouldn't touch it

To overexcited investors this much-hyped gold bitcoin company has pulled off a fantastic deal. But Dominic Frisby exlains why you should still steer clear28 May, 2015

  • This bitcoin company might have tonnes of gold now – but you still shouldn't touch it
  • The Queen’s Speech: the most important points for investors
  • The euro has moved as predicted – time to bank profits
  • Yesterday’s close: FTSE 100 up 1.2% to 7,033… Gold up 0.1% to $1,188.05/oz… £/$ - 1.5354

From Dominic Frisby, in London

Dear Reader,
Today, we revisit a story I wrote about last week – the company that is aiming to be the PayPal for gold, Canada-listed BitGold.

There was a huge announcement on Friday. BitGold acquired GoldMoney.

GoldMoney is a vehicle to buy and sell precious metals online and store them. It has good brand awareness (people know and like it), 870 tonnes of gold and silver under storage and 20,000 customers.

It might at first look like a great deal. A game-changer even.

But it hasn’t changed my view that you shouldn’t touch BitGold…

Share this post


Link to post
Share on other sites

Erewhon888:

photo-thumb-3288.jpg?_r=1400319011

 

(here's what Dominic Frisby said):

Subject: This bitcoin company might have tonnes of gold now – but you still shouldn't touch it

Quote

Quote

 

James Turk, founder of GoldMoney (recently acquired by BitGold), responds to Dominic Frisby’s take on BitGold from Thursday’s Money Morning.

Dear Dominic,

I am writing in response to your latest article about BitGold’s purchase of GoldMoney. I would like to clear up some points, so that your readers understand this transaction. BitGold is not a “bitcoin company” – if you need a comparison, it is much more “PayPal” than “bitcoin”, but BitGold can be better understood as a “digital gold” company, which of course is what GoldMoney invented and patented.

The digital gold currency being offered by BitGold is a technological advancement upon the service GoldMoney provided until January 2012. The profitability of a high velocity payments business like PayPal dwarfs that of gold ETFs and custody businesses. When GoldMoney launched 15 years ago, its payment service was ahead of its time. Today the market is ripe for innovation.

BitGold and GoldMoney will operate separately, offering products and services that appeal to different market segments.GoldMoney will continue to operate as before, while BitGold is focused on widening access to gold by enhancing its use as currency in day-to-day current accounts, and by enabling customers to accumulate value over time with any level of savings. These services are particularly useful in emerging markets and for those just starting on the path toward wealth accumulation.

GoldMoney customers who are not US residents can open an account with BitGold if they choose to do so, and I expect that many will. Similarly, BitGold customers can open a Holding in GoldMoney. Just as many people have two bank accounts – a current account and one for savings – we expect customers to use BitGold/GoldMoney in the same way.

Though our two companies will operate separately, there will be efficiencies that can be achieved that benefit customers, which results in satisfied customers. That means the shareholders of the combined company will benefit too, which leads to the heart of your article.

You are making a judgement call about the share price of BitGold. I am a firm believer in the market process. I also believe that investors will undertake the research needed to make an informed decision about whether or not to buy the stock of any listed company.

In my five decades of investing experience, I know first and foremost to look at the management team. I am impressed by the breadth and depth of the team that BitGold has assembled. They have experience in online commerce, deep IT skills, creativity, dedication, enthusiasm and above all, integrity. This mix of ingredients is necessary to build a successful company, and when joining with the people already within GoldMoney, it is a formidable combination.

By choice, GoldMoney shareholders are receiving shares of BitGold, not cash. I view these shares to be a long-term investment for holding well beyond the 12-month lock-up. There exists vast potential for changing online payments, and in my view, BitGold has the right people and resources to take advantage of this potential to the benefit of its customers and shareholders. GoldMoney shareholders want to be part of that effort, but will BitGold/GoldMoney be successful?

The future cannot be predicted of course, which explains the importance of relying upon a first-class management team. Good people can make good things happen. Importantly, the opportunity to change online payments exists, notwithstanding your concern that metal payments years ago never took off. Nor for example, did ATMs, which existed for many years before bank customers finally understood their many benefits. The point is that customer adoption in financial services often comes slowly; it is a natural response because people do not want to take risks with their money.

Additionally, the use of metal payments in GoldMoney was affected by Gresham’s Law, which states that bad money drives out good. In other words, money can be spent or saved, and the bad currency gets spent, and the good currency gets saved. BitGold has the opportunity to reverse this, for two reasons.

First, although safety plays an important part, currency is driven mainly by ease of use and cost, with the lower-cost currency being spent. BitGold’s technology addresses both of these points, and makes digital gold currency the easiest to use, lowest-cost and most secure way to make payments. Using the latest technologies in mobile payments, functional programming (? something to check) and cloud computing for speed and scalability, and effectively reorganising the way gold bullion will exchange and settle, the BitGold technology can help solve the most fundamental problem in money – making a store of value a good medium of exchange.

Second, Gresham’s Law is something goldbugs understand, which is the market segment that GoldMoney addressed. But BitGold is attracting users who have never bought gold. What’s more, the average account size in GoldMoney is about US$70,000, compared to about US$100 in BitGold. Anyone with such a small exposure to gold will not care about Gresham’s Law. BitGold is opening accounts for people who want to use digital gold currency to make payments and buy things online, which will attract merchants to BitGold and provide it with another important source of profits. Only time will tell of course whether or not new impediments develop and hinder the adoption of digital gold currency. But GoldMoney shareholders want to participate in this journey, and I will also participate as a member of the Board of Directors of the combined company.

In 2013, I retired as chairman of GoldMoney, but have remained a member of the board. Once this transaction closes, I will join the BitGold board with two fellow GoldMoney directors, Hector Fleming and Mahendra Naik.

I look forward to participating in the combined company which offers an historic opportunity for the gold industry by creating an entirely new demand for gold – its use as online currency, to spend gold and even earn gold as people’s currency of choice. I am hopeful that I can contribute to the BitGold/GoldMoney strategy to ensure that its plans and ideas come to fruition. I will also do my best to ensure that BitGold/GoldMoney remains the industry leader in governance practices to provide our customers with assurances of integrity so they know that their money is safe.

Yours sincerely,

James Turk

Founder & Director, GoldMoney

Share this post


Link to post
Share on other sites

Erewhon888:

photo-thumb-3288.jpg?_r=1400319011

 

Some interesting dots to connect...

Quote

Roy Sebag
Founder - Chief Executive Officer
Roy Sebag is the founder and team leader of BitGold. He has been an active investor and portfolio manager for over a decade specializing in distressed, event-driven, and natural resources investments. Throughout his career, he has correctly predicted important investment and economic themes before they materialized resulting in risk-adjusted returns that significantly outperformed market indexes.
Josh Crumb
Josh Crumb is the co-founder and Chief Strategy Officer of BitGold. He is an entrepreneur with a background in early stage global businesses. Josh was previously the Senior Metals Strategist at Goldman Sachs in the Global Economics, Commodities and Strategies research division in London. He also held various positions within the Lundin group of companies, serving as Director of Corporate Development and Special Project Analyst for group chairman Lukas Lundin. Currently, Josh is a director of three Canadian listed public companies and plays a large role in many philanthropic organizations. He holds a Master of Science degree in Mineral Economics, a Graduate Certificate in International Political Economy, and Bachelor of Science degree in Engineering from the Colorado School of Mines.
Alessandro Premoli
Alessandro "Alex" Premoli is the Chief Technology Officer of BitGold. He is the architect of the BitGold proprietary platform, and leads the BitGold development team in Milan, Italy. Over the last decade, he has developed encrypted storage and messaging systems for highly sensitive, data-intensive organizations, gaining comprehensive experience in security, cryptography and digital signature solutions. Alex has been an important member of the cryptocurrency community for several years and has been involved in the Ripple financial protocol since its early days. He is passionate about open-source projects and is an active committer to the FreeBSD Project under the moniker "Alex Dupre". He holds a Masters Degree in Informatics from the University of Milano-Bicocca.
Luca Molteni
Luca is a Software Engineer with BitGold. He has an affinity for functional programming and has worked with some of the world's top enterprise tech companies. In his spare time Luca enjoys collaborating and connecting with his local Scala and Java user groups.
Alexander Barsukov
Alex is responsible for the backend of the all important BitGold user experience. He is a web development expert and has been involved in the advancement of various payment systems, crypto-currencies and currency exchanges.
Paul Mennega
Paul is a full stack web application architect with a pragmatic approach to technology and an unquenchable passion for solving problems. He's been slogging it out in the startup space for the last 5 years, with the lessons and scars to prove it. Entering the tech world during the dot-com collapse and witnessing the housing bubble from a front-row seat in Silicon Valley, Paul's developed a keen interest in global macroeconomic trends and precious metals, especially where those trends intersect technology.
Agostino Carandente
Agostino is a Software Engineer with BitGold. He specializes in front-end web development and mobile apps. He has designed, built and relentlessly debugged high visibility, public facing projects for companies working on mobile payments, banking and public transportation. He holds a degree in Computer Science and Engineering from Politecnico di Milano.

Share this post


Link to post
Share on other sites

This critique of a journalist who reports on Pizzagate, seems to be based on his liking of Goldmoney.

which is a newish company, which has a few important business risks.

I would say that a Goldmoney credit card is NOT cheap to use - be careful with that.

And buy and selling Gold through GM/XAU will cost you a lot.

But holding gold in storage there may still make sense.

(I like having a public company, whose share price we can monitor, for potential risks.

 

WIPEOUT ?

last night was a "witching" by witches -- is this why David Seaman is "gone"?

 

PIZZAGATE- DAVID SEAMAN ACCOUNTS ALL DELETED! TWITTER, YOUTUBE, VIDME

 

On another site, says; "User took down the Video"

David Seaman deleted his videos

 

SEAMAN's Channel : Still up : https://www.youtube.com/user/davidseamanonline

But show no videos

 

Here's a not-too-solid critique of David Seaman:

 

David Seaman, Pizzagate & Goldmoney

https://www.youtube.com/watch?v=tZXDHzZlYzU

Published on Feb 25, 2017

If you have an account with Goldmoney or are considering opening one, please watch this video. I've also been approached by some people concerned that David Seaman isn't being completely on the level with us, so I explore those concerns.

Link to public filing for Bitgold (Goldmoney): https://drive.google.com/file/d/0B_EH...

 

XAU.t / Gold Money's share price is rangebound, not crashing ... update

 

XAU-gm_zps8ahmy0gx.gif

 

"I did some research on Goldmoney, says the Video maker." And then there were some negative criticisms of their customer service.

A negative criticism that was meaningful was that there was a GBP 45 charge, using the GM credit card.

Perhaps GM is better as a Storage service, than as backing for a credit card.

=

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×