This is the story of setting up a blockchain startup in the gold industry and the price of keeping things fair. I’ll try keep it short and sweet.
A couple of months ago, I embarked upon a journey that the world is not familiar with, yet. After all this time, I feel it’s finally ready to be revealed.
Where it all began
As strange as this might sound, it all began in a vault, roughly 13 meters underground. Back then, I was discussing with the owners and managers of the vault about how blockchain can revolutionise their business model. That was the first time that proper asset fractionation through tokenisation crossed my mind.
It didn’t take long to get from that to Aurus and what it currently stands for.
Aurus (and what it currently stands for)
Aurus is a blockchain startup that aims to revolutionise the gold industry, using blockchain technology to make gold easier to trade and use, opening it to the masses. In certain ways, what Bitcoin is doing to money, we are doing to gold.
Long story short, we’re creating a cryptocurrency that is 100% backed by gold. Having gold in the shape of a cryptocurrency makes it much easier and cheaper to hold, spend and trade by making gold more liquid. Think about it as such: 1 AurusGOLD (AWG) coin represents 1 gram of 99.99% LBMA (London Bullion Market Association) approved gold, redeemable at any time for the physical gold.
Now think about the fact that, because it’s a cryptocurrency, one can trade 0.00001 AWG or $0.0004 worth of gold. This is how we’re making gold more liquid. Also, there are a few more “cool” perks. Since we’re making gold easier to move around, we can also create a debit card that allows AurusGOLD holders to spend their AWG anywhere for anything.
The blockchain space so far
After finalising the idea, we dove deeper into the blockchain startup space to find out more. I went from conference to conference around Europe and my team all together traveled pretty much the whole world.
What we learnt was exciting yet not very pretty. Whilst many teams are trying to advance their knowledge and come up with ways of revolutionising the economy or use technology for the greater good and making our lives better, there are also startups involved in the space simply for the easy money that could be made through ICOs or Initial Coin Offerings.
Many of these are even made without any regards to regulation (which is indeed difficult to factor in as it is scarce, difficult to understand and fragmented for those who attempt global businesses). The truth is that lots of people were investing big sums in ICOs left and right without any real due diligence. This space truly brought out the opportunist in people and that’s not all bad, in fact, it made things very interesting.
My goal from the very beginning with Aurus was to bring real value to the world with this company, with a use-case for blockchain that actually requires the technology, a team that can deliver on a vision and partners that are willing to see this company grow and do some good in the world.
The cost of quality and fairness
In short, a potential $20 million and probably another half of that spent in headache medicine and anti-depressants.
All jokes aside, it was difficult to take slow steps, trying to make sure we build the right team and figure out all legal aspects before moving forward in any way.
The struggle began with building the right relationships within the gold space. Our business model relies on having reliable gold partners. These gold partners have to be willing to invest a lot of gold into the platform. Moreover, gold vault partners have to accept a significant change in their traditional business model. In order for AurusGOLD to be a sustainable gold currency, the storage and insurance of the gold should not be paid for by Aurus as a company but rather by Aurus as a platform. It was vital for us that vaults agree to store and insure the gold for a percentage of our revenue.
Our next big challenge was fairness. The problem is complicated to describe in full detail but I’ll try a short version. In order for our platform to be fair, it’s important that AurusGOLD (AWG) holders pay for the storage and insurance of the gold that they own, strictly for the amount of time that they own it. We cannot automatically charge every wallet a fixed amount per day / month since cryptocurrency exchanges hold funds in centralised wallets for multiple users. Taking coins from these wallets would force each and every exchange and centralised wallet to create custom implementations allowing their users to accurately keep track of their funds. It took a while but we found a solution for a fair fee and for those who will read into our whitepaper, you will discover the price of that is around $6 in ETH for each transaction, at least for now. It’s expensive but I think it’s worth it. Our plan is to launch with this and see how the cost of fairness drops as this wonderful technology known as blockchain progresses.
Not cutting corners takes a lot of time and time in the crypto space goes by five times faster than in the real world. This put a lot of pressure on us to try to keep up with startups that did not… pace as carefully as us.
The reward of quality and fairness
The previous paragraphs seem bleak. The price of fairness brings a great reward.
I’m very happy and proud to say that this company is shaping up exactly as I had hoped. For starters, we’re backed by an amazing software development company that specialises in blockchain and that I have been practically family with for years.
Couple that with our partnership with a few of the biggest gold players in Europe that will provide any demand of gold with a virtual limitless supply and things seem like they will pay off.
The reward is that the concept of Aurus is now backed by a strong and inspiring team that seems to attract people and companies who actually want to make a difference.
From my point of view, that is priceless.
Time will tell where this journey leads. Suffice it to say that I’m happy with where it’s already taken us and I trust that our team will push as hard as possible to achieve our goals. The next steps are interesting as we show our idea to the world and start building our dreams.