Kinesis Money
The Digital Evolution Of The Gold Standard
Kinesis Money is a monetary platform built around physical gold and silver, designed to allow individuals and businesses to buy, hold, transfer, spend, and receive precious metals through a digital payment system.
Rather than relying on fiat currencies, the platform uses two native tokens: KAU, which represents one gram of gold, and KAG, which represents one ounce of silver. Each token corresponds to direct ownership of fully allocated physical metal held in insured, independently operated vaults across several major precious-metals trading hubs. The one-to-one backing of KAU and KAG is independently audited twice a year by Bureau Veritas, a global inspection, testing, and certification company.
In 1830, the British economist Nassau William Senior observed that “the portableness of the precious metals and the universality of the demand for them render the whole commercial world one country, in which bullion is the money.” Gold-backed tokens such as Pax Gold and Tether Gold are primarily designed as investment products. Kinesis takes a somewhat different approach: KAU and KAG are intended to function as digital currencies within a broader monetary system, in effect bringing precious metals back into a role they occupied for much of human history.
Why People Are Looking Beyond Fiat Currencies: The Quest for Sound Money
In his 1966 essay Gold and Economic Freedom, long before becoming the 13th Chairman of the Federal Reserve, Alan Greenspan offered a striking explanation of why he believed the gold standard had come under sustained attack: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. … The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
Whatever one’s view of the gold standard, the broader concern he identified remains relevant: fiat currencies are not fixed stores of value. Over time, persistent inflation reduces their purchasing power. Gold, meanwhile, was gradually pushed toward the margins of modern finance and monetary discussion.
Unfortunately, while fiat currencies steadily lost purchasing power, gold was increasingly pushed to the margins of finance and monetary discourse. In A Tract on Monetary Reform (1923), J. M. Keynes had already characterised the gold standard as a barbarous relic. In a July 2015 column for The Wall Street Journal, financial journalist Jason Zweig called gold a pet rock, an expression that became a shorthand for the broader critical view of gold as an investment. Investment advisors and financial analysts largely shared Warren Buffett’s dismissive view that gold was just an unproductive asset sitting idle in a vault: “[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility.”
But the change was about more than gold’s status as an investment. Its much older role as money was also pushed into the background. In modern monetary systems, and in much of the financial commentary surrounding them, gold gradually came to be treated as though its monetary history were largely irrelevant to the present.
That assumption can be seen in something as ordinary as online investing forums, where gold is usually discussed under commodities rather than currencies, as though its centuries-long monetary role were merely a historical curiosity. It was also captured memorably during Ben Bernanke’s testimony before the House Financial Services Committee in 2011. When Rep. Ron Paul asked why central banks continued to hold gold if it was not money, Bernanke’s answer was a single word: tradition.
I believe—perhaps partly through what economists describe as the Cantillon effect, whereby newly created money tends to benefit those closest to its creation before the resulting price increases spread through the wider economy—that the separation of money from gold has benefited the financial establishment disproportionately relative to ordinary citizens. I also believe that continual monetary expansion confers significant advantages on sophisticated investors and those with superior access to information, financial expertise, credit, and complex investment products, relative to the unbanked and underbanked (18% of U.S. households in 2023, per the FDIC) and to households with limited savings and little financial flexibility.
Democratizing Access to precious metals
In some countries, a mature retail bullion market makes buying physical precious metals relatively straightforward. In many others, however, such a market is either underdeveloped or virtually nonexistent, leaving ordinary people with few practical ways to acquire and hold bullion. Even where reputable dealers are readily available, purchasing physical gold or silver involves considerably more friction than opening a savings account or buying an ETF: investors must decide between coins and bars, determine which denominations make economic sense, consider insurance and secure transportation, verify authenticity, compare dealer spreads, and, perhaps most importantly, decide where the metal should be stored.
The familiar principle if you don’t hold it, you don’t own it, which some precious-metals investors treat almost as an article of faith, also reflects a particular set of circumstances. It makes intuitive sense in wealthy and politically stable countries where secure home storage is reasonably practical, but that assumption does not hold everywhere: for millions of people, security concerns, inadequate housing, political instability, or weak legal protections can make storing valuable bullion at home impractical or even dangerous. The principle also becomes less straightforward when applied to institutions: a pension fund may own allocated physical bullion held in a professional vault, for example, without anyone expecting the fund itself to take possession of and personally safeguard the metal.
Platforms such as Kinesis seek to eliminate many of these obstacles. Allocated gold and silver can be purchased with nothing more than a smartphone and an internet connection, while the exchange enables trading against major currencies and cryptocurrencies at wholesale prices.
The model also addresses one of the principal drawbacks of conventional physical bullion: liquidity. When someone buys a gold bar or silver coin, a substantial amount of capital can remain effectively locked into the physical asset until the owner finds a buyer and completes a sale. A digital representation of allocated metal can, by contrast, be transferred or exchanged without requiring the owner to give up the underlying exposure to precious metals.
Divisibility is another important consideration. KAU and KAG can be purchased in extremely small increments—down to 0.00001 grams of gold or 0.00001 ounces of silver. That makes ownership accessible even to people with very limited amounts of capital, rather than restricting precious-metals ownership to those who can afford to purchase conventional coins or bars.
To me, the model bears some resemblance to the way mobile banking transformed access to financial services in emerging markets. M-Pesa, for example, enabled millions of people in East Africa to store and transfer money using basic mobile phones without requiring a conventional bank branch. Kinesis applies a related idea to precious metals: instead of requiring individuals to locate a bullion dealer, purchase a suitable denomination, arrange insurance, and find a secure place to store the metal, it provides a digital interface through which allocated physical gold and silver can be held and used.
Gold Standard 2.0: Sound Money for the Digital Age
Kinesis goes further than simply making bullion easier to own. Users can transfer Kinesis’ currencies instantly between wallets. The Kinesis Card works like a regular payment card, converting gold and silver holdings into local currency in real time at checkout. Merchants can accept payments in precious metals through Kinesis Pay. In each case, the aim is to give gold and silver a practical monetary function again, rather than leaving them confined to the role of investment assets sitting in a vault.
New forms of payment have often been met with skepticism precisely because they disrupt familiar habits. When credit cards first appeared, many people questioned whether consumers would really trust a piece of plastic in place of cash. Online banking encountered much the same resistance, with plenty of people insisting they would never entrust their money to the internet and would always prefer to conduct their financial affairs in a physical bank branch. Today, both credit cards and online banking are so commonplace that it is easy to forget how radical they once seemed.
Platforms such as Kinesis can be understood as a kind of Gold Standard 2.0. The concept is not to recreate the monetary system of the nineteenth century, but to combine one of the oldest forms of sound money with the technological infrastructure of the digital economy: gold provides the underlying monetary asset; digital technology provides the speed, divisibility, portability, and convenience that physical bullion has traditionally lacked.
Recent legislation and initiatives in states such as Texas, Utah, and Florida have also begun laying the groundwork for electronic payment systems based on gold and silver, suggesting that the idea is no longer confined to the realm of monetary theory or precious-metals enthusiasts. There is a growing willingness to explore how precious metals might function within modern payment infrastructure rather than simply being held as static stores of value.
There is, however, an important difference between this model and the original gold standard: participation is voluntary. Individuals and businesses can decide whether they want to hold or transact in precious metals, they are not required to abandon national currencies, nor are they forced into a single monetary arrangement imposed from above. This distinction brings the idea close to one of Friedrich Hayek’s central convictions in Towards a Free Market Monetary System: “I am more convinced than ever that if we ever again are going to have a decent money, it will not come from government: it will be issued by private enterprise, because providing the public with good money which it can trust and use can not only be an extremely profitable business; it imposes on the issuer a discipline to which the government has never been and cannot be subject.”
To me, this voluntary character—and the currency competition that follows from it—is one of the most compelling aspects of the model: rather than asking governments to design a perfect monetary system, it gives individuals and businesses the ability to choose among different forms of money. In that sense, it introduces something that might reasonably be called free monetary choice.
Why the Allocated Bullion Exchange Matters
The infrastructure behind Kinesis is built around the Allocated Bullion Exchange, or ABX, an institutional platform for the trading and storage of physical precious metals. ABX began in 2011 and was fully launched in 2016. For an everyday user, the history of ABX matters less than the infrastructure it provides: at the heart of Kinesis’ ecosystem is an established network of professional vaulting and logistics providers, including companies such as Malca-Amit, Armaguard, and Loomis International. These relationships provide access to insured storage and transportation infrastructure distributed across major precious-metals trading hubs.
This is an important but easily overlooked part of the model: digital ownership of physical bullion only works if there is a reliable system behind the screen. Someone has to store the metal, maintain accurate ownership records, reconcile transactions, move bullion when necessary, and ensure through regular audits of the metal inventories that the quantity recorded in the system corresponds to the physical assets held in custody. The custody infrastructure of ABX addresses those requirements.
In other words, the digital interface of the Kinesis platform is only the visible part of the arrangement. Behind it sits a conventional precious-metals infrastructure of vaults, logistics providers, ownership records, reconciliations, and independent verification. The innovation lies less in replacing that infrastructure than in making it accessible through a digital monetary system.
Can Gold and Silver Become Money Again in a Digital Economy?
When one considers the early history of the United States, it is striking how deeply some of the most influential Founding Fathers distrusted unbacked paper currency. Thomas Jefferson warned that “Paper is poverty, it is only the ghost of money.” George Washington spoke of states “falling into very foolish and wicked plans of emitting paper money.” James Madison called it unjust and unconstitutional, noting that it “affects the rights of property as much as taking away equal value in land.”
There is an obvious historical irony here: the very men who warned against paper currency now adorn the paper money whose expansion they would have decried.
The modern case for gold, however, faces a problem that did not exist in quite the same form in the eighteenth or nineteenth centuries. Today’s monetary system is deeply integrated with digital technology. National currencies are embedded in taxation, employment contracts, banking systems, accounting standards, government obligations, and virtually every aspect of commercial life. The US dollar, in particular, remains deeply entrenched in international trade and cross-border financial transactions. Critics of a renewed monetary role for gold therefore argue that even a technologically sophisticated gold-backed payment system would struggle to compete with fiat currencies: it is one thing to create a digital representation of gold; it is another to persuade consumers, employers, merchants, financial institutions, and governments to use it as money on a meaningful scale.
An interesting tension exists within the communities most sympathetic to sound money. Precious-metals investors broadly favor a return to some form of gold standard, or at least a more central monetary role for gold. Yet that enthusiasm rapidly dissipates when it comes to gold- and silver-backed digital currencies, reflecting a deep-seated distrust of the digital realm, shaped in large part by Bitcoin and the broader cryptocurrency phenomenon. Within these online circles one repeatedly encounters a nostalgic vision of monetary reform: restore gold and silver to the position they held a century ago, then simply transplant the payment systems of that era into the present, overlooking that a payment infrastructure designed for an era of banknotes, cheques, and paper-based accounting records cannot simply be transplanted into today’s digital economy.
Cryptocurrency enthusiasts often approach the issue from the opposite direction. From that perspective, the physical nature of gold is precisely the problem. Gold has to be mined, transported, vaulted, audited, and ultimately represented somehow in a digital economy. Bitcoin and other digital assets appear, at least conceptually, to avoid many of those constraints.
All of which leads us to the central question: can gold and silver still function as money in economies underpinned by digital payments?