Micro Gold –This is going to be very big

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1 September 2016
John Dwyer

I published a report today looking at the powerful combination of DLT with physical gold to create an asset class we call Micro Gold.

The report explores the key drivers for this use case including the prevailing environment of negative nominal interest rates, full interoperability with legacy systems, and a blue sky opportunity due to the lack of incumbency.

The combination of a regulated central bank asset with the functionality of DLT presents an enormously compelling platform for payments, wealth management, and a host of other use cases.

For those who have read our report, Beyond the Buzz, you have seen our framework for assessing the maturity of DLT use cases based upon the level of cooperation required with competitors, new FinTech entrants, other market participants, regulators, and so on.

Ultimately though, the key question is how does one achieve broad adoption of a new technology in the financial market place? Well, Micro Gold has demonstrated rates of adoption which outstrip technologies such as Uber, Facebook, and PayPal when they were at similar stages of maturity.

The breadth of relevance of this technology is simply staggering including individual payments, individual savings, global business payments, private wealth management-even the underbanked. Emerging markets and developed markets alike will see the utility of Micro Gold while a seamless UX, regulatory clarity, and micropayment functionality will continue to support adoption rates and, critically, network effects.

It also has a range of ways of mitigating ‘hacking risk’ which continues to be an issue for cryptocurrencies, financial institutions, and (let’s face it) everyone.

The potential for new use cases to emerge via developer APIs adds additional sizzle factor. Hence, I have enormous confidence in Micro Gold. It will be interesting to observe how this story unfolds as vendors and FIs step up their intensity as the pressure grows to implement and commercialize DLT use cases.

This report is the first of a series of three reports which I will be publishing which will explore the implications of DLT for fiat currency; the next report will look at the hot topic of Central Banks and provides a framework for how they may be thinking about its potential.

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