Interviews and Reviews

The Next Era of Gold with Kinka

Q: What is Kinka’s main mission and vision? What inspired you to create Kinka?

Kinka Gold’s main mission is to rethink what a stablecoin should be. All national currencies inflate through money printing – stablecoins are only as viable as the currency which backs them and the company which issues them. The purpose of stablecoins is to allow investors to store value on chain without the volatility inherent in investments such as Bitcoin or Ethereum. 

Now, however, people are questioning the value of dollars and moving their assets into safe haven assets such as gold. People are also questioning the viability of stablecoins backed by national currencies, and the companies that issue them.

Our mission is to provide the market with a bankruptcy-remote store of value on chain which always holds its value against the bars of highly-regulated Japanese gold that sit bonded in the vaults.

Q: There has been significant retracement from crypto’s all-time highs, but the market has been slowly bubbling away. Why are you launching Kinka now?

We feel that the biggest reason for the retracement within the crypto sector can be pinned to bad actors and general mistrust in the crypto sector as a whole given how rife the market is with rug pulls and scams.  

On a macro level, the whole world is now talking about a potential crash while the US Feds continue to raise interest rates to try and cool inflation, pricing out many assets. Most investors are now holding cash, but inflation is still stubbornly rising.  

It’s the perfect conditions for investors to diversify into gold, which has always been the best performing asset in any financial crash.

Q: What do you think will be blockchain’s impact on the financial system?

Coming from a background in traditional finance as a highly regulated, listed company, we feel that crypto will never take over the financial markets like some might believe.  

There will always be a need for regulators and general market oversight however we are sure that blockchain as a technology slowly becomes more and more a part of the global system given its highly transparent nature and accurate historical accounting.

Q: What is Kinka’s primary advantage over its competitors?

We believe that our token is the most bankruptcy-remote gold-backed token in the market. While the gold is initially issued by our highly regulated company in Japan, the gold itself is not subject to any bankruptcy or any creditor claims to that parent company. The gold sits fully bonded on behalf of the token holders and is ring fenced from the business of Daiichi Commodities.

Q: What is the benefit of Kinka’s gold being regulated in Japan?

Japan is a highly regulated environment and regulations are applied to the highest standard.  Japan’s authorities have not yet legally ratified any currency-backed stablecoins within its jurisdiction. Daiichi Commodities is under the highest level of scrutiny from any gold coin issuer in the world, and we are fully compliant. 

Q: How does the price of buying $XNK compare to buying physical gold?

The price of $XNK will always be equal to exactly the value of 1 oz of gold, with its price pegged to the London market, which is the global standard. Due to high liquidity, there will be a tight spread between bid and ask which should match the London market.

Q: Why is tokenization of gold so important? Can’t I just wear jewellery?

To be honest, owning gold and holding it as gold jewellery is possibly the worst way to invest in gold. Of course, gold jewellery is nice to perhaps showcase your wealth, and demand for it does underpin markets, but it is by no means an efficient store of value.  

I think your real question is why not hold a bar of gold vs purchasing a Kinka token. While holding a physical gold bar is indeed one of the safest and most secure methods of investing in gold, it does require a lot of infrastructure to hold it safely thus it is not appropriate for casual investors. There is a scalability issue with a minimum amount of gold required to hold before the cost of storage and auditing becomes worth it.

Kinka is similar to other gold backed investments in that it not only streamlines the ownership of gold by reducing the holding costs to zero, it also allows smaller retail investors to add a gold investment to their portfolio, even if their position is just a small fraction of the value of an entire kilogram gold bar (today worth US$64,000). 

Q: What are the use cases for $XNK that go beyond gold tokenization?

Besides a simple and easy way for an investor to have exposure to the gold price in their portfolio, we hope that it will become a good way to transfer value and be used as a stablecoin since it has a very stable price and can be held and transferred without anybody’s permission.

Within DeFi we are working towards giving it a place at the table as a future pairing against any other token to provide liquidity.  Daiichi Commodities as a gold trading company is very interested in exploring its use cases in DeFi as a trading pair.

Q: Do you have future plans to extend $XNK’s use case? Other metals perhaps?

While XNK’s value is strictly pegged to the value of 1 oz of gold and the amount of tokens issued is strictly matching the amount of gold in the vaults, we are now finalising our planning with potential development partners to produce a new governance token that will help strengthen the 3rd party auditing and verification process.  We expect to tokenize and decentralize the actual practice of proof of reserves with a high level of transparency that will immutably and permanently be recorded on chain  Once our governance token is completed and tested, we can use the same method for other rare metals.

Q: What is the long term goal of Kinka?

Japan has yet to allow any kind of stable coin into their regulated markets as the regulators simply don’t trust that a USD-backed stablecoin will actually be worth $1 by the issuer in the event of a bank run.  

Our long term goal is to become Japan’s first home grown cryptocurrency that is truly considered to have a stable price and will always retain its value pegged to the bonded gold in the vaults. Inviting you all to follow us on Twitter and join our Telegram community chat to stay up-to-speed with everything about Kinka Gold! 

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