Roy Sebag and Josh Crumb started their business with one simple guiding principle.
\”We wanted to be able to go into Tim Hortons and buy a coffee with gold, with our credit card or debit card,\” Sebag said in an interview.
\”It went from being a hobby of how to do that to this whole company.\”
Investors will begin to get a better look at their vision on Wednesday, as shares of BitGold Inc. begin trading on the TSX Venture Exchange. It\’s the culmination of several years of hard work by the founders, and it is being backed by States, Sprott Inc. and other big-name financiers. The organization has a valuation of more than $30 million.
BitGold may be the first serious financial services platform ever built around gold. The online service allows users to purchase gold, store gold, and purchase goods and services all over the world using gold because the currency. The service continues to be active for less than a week, but has already signed up thousands of users.
Related
Mining heavyweights seek to build mid-tier gold producer in $190M Newmarket-Crocodile mergerBMO available to Bitcoin if virtual currency is regulated, reliable, says CEO Bill Downe
As its name implies, BitGold takes inspiration from Bitcoin. But there are a lot of questions regarding the intrinsic value of bitcoins. While gold has plenty of non-believers, the metal is a medium of exchange for thousands of years.
Sebag and Crumb, who\’re 29 and 35 respectively, got the idea for BitGold soon after the financial crisis in 2008. Sebag was a hedge fund manager at that time, and the collapse of Lehman Brothers made him alarmed about counterparty risk. He talked to some mentors about his concerns, plus they piqued his interest in gold, without any counterparty risk.
He never embraced the end-of-the-world ideology so beloved by gold bugs. But he saw the value of using gold as a currency, and he was surprised there wasn\’t any bank fully backed by gold. He partnered with Crumb (with a mining background) around this time, and they got to work creating a financial platform that would make gold more accessible and a simple medium for transactions.
Other individuals have tried to make a move like this previously, but they were never in a position to overcome the legal and technical impediments. Sebag and Crumb caused lawyers and politicians to offer this service under Canadian bailment law. They got the world\’s largest bullion banks for connecting to their platform, and got Brink\’s Company, a number one storage and security company, for everyone as clearing house for trades. Through Brink\’s, BitGold can track whenever gold of its customers moves interior and exterior vaults.
\”It is really a complicated (structure). As well as the user – which is the main thing – it\’s just Paypal with gold. It\’s a nice clean interface,\” Crumb said.
After users undergo an extensive sign-up process at bitgold.com, they could deposit funds and acquire gold kept in vaults in six different cities all over the world. After that, they are able to pay for goods by using their gold or redeem physical gold in 10-gram cubes (worth about US$400). Brink’s handles the transfer of the gold forwards and backwards parties. BitGold intends to launch debit cards in the next month or two which can be used at any ATM or retail location. That will permit users to purchase that Tim Hortons coffee with gold, just like its founders dreamed.
BitGold has a one per cent fee to purchase gold and a one per cent fee to redeem it. Storage is free of charge. The founders argued this is a far more attractive fee structure compared to popular gold exchange-traded funds, which have annual fees.
Sebag, the main executive, has been telling the road that he has a target of fifty,000 customers for BitGold. But his hopes are an order of magnitude greater than that. In line with the rapid take-up from the platform within the first few days, he explained it appears to be way over a niche product for a small group of users. He noted that hardcore gold bugs make up less than 10 % of the users list so far.
\”I\’m seeing friends who signed up sending payments to one another,\” Sebag said. \”I know they bet on football, and now they\’re paying each other.\”