The value of Bitcoin has dropped by more than 55% year-to-date. Consequently, many investors have abandoned their hopes of Bitcoin becoming the primary currency in our economy. The digital currency, once heralded as the future of commerce, has failed to become a mainstay of finance since its inception more than a decade ago.
While Bitcoin may be a dream coming to an end it seems that the underlying blockchain technology that powers it has an unexpectedly bright future. More people are turning to digital ledger technology as a solution to challenges outside the world of Bitcoin. Blockchain technology supports practical technologies like smart contracts, decentralized title registry for real estate, and cyber security programs.
Recently, some have even suggested that blockchain technology can solve a problem in the gold industry. The idea is simple: use blockchain technology to track the complete transaction history of gold bars. The purpose of this project is to prevent the circulation of illicit gold.
The plan, titled the “Gold Bar Integrity Programme” is a collaboration between the World Gold Council and the London Bullion Market Association. Officials aim to use blockchain technology to track the place of origin for each bar and the chain of custody which would include information about transporters, exporters, miners, manufacturers, and processors.
The intent of the project is to prevent illegal mining. Such operations usually exist in conflict zones and are executed by criminal gangs. In many cases, these bars are given counterfeit stamps to gain the look of legitimacy.
Brian E. Nelson, the US Treasury Undersecretary for Terrorism and Financial Intelligence, explains that “conflict gold provides the largest source of revenue to armed groups in eastern DRC where they control mines and exploit miners.” Creating a digital ledger which tracks all legally mined gold would likely prevent or dramatically reduce this activity.
Today the plan is still in its early stages. Though the technology is borrowed from the Bitcoin world it will have some key differences. For example, the public will not be able to access information on all gold purchases. Instead, individuals at various stages of the transaction will be able to access the blockchain if given permission.
Many are hopeful that this new system will give gold buyers more confidence in their purchases. If individuals can be certain that they are buying a gold bar that was legally sourced they will have one less hesitation when it comes to investing in the metal. With transparency comes trust.
The blockchain solution is about more than investor trust. It is also about preventing bloodshed. In early 2022, the US Treasury Department placed sanctions on a Belgian businessman and his companies for taking ownership of gold that the US believed was directly tied to armed conflicts in the Democratic Republic of the Congo. Blockchain technology could soon become instrumental in preventing these operations.
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