A currency facilitates exchange by allowing the value of all goods and services to be easily compared. Historically, physical commodities – most notably gold and silver – served as currency. Physical commodities have value because of their natural scarcity and the labor and capital necessary to produce them.

 

Economist, philosopher, and Nobel Laureate F.A. Hayek, in 1976, advocated the idea of competitive private currencies backed by assets held in reserve. In his book “The Denationalization of Money” he posited that raw materials, which have a high correlation to overall rates of monetary inflation, would likely be the most appropriate assets to use.

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Our founders Richard W. Rahn and Alberto Gross further refined Hayek’s argument, and proposed that the commodity most appropriate would be aluminum given its wide-spread distribution, high degree of consumer and industrial utility, and recyclability. The main obstacle to the use of aluminum (or any other base metal) as a monetary standard is its low value-to-weight, which makes its storage inconvenient for the average individual. A digital token representing ownership of the underlying aluminum removes this obstacle.

 

Today, all currencies are fiat currencies, without any hard anchor. Their supply is determined by central banks or national treasuries without external limits. This makes it possible for banks to take excessive risks in their lending practices. Because of this, the world is losing faith in national fiat currencies. The ever-increasing popularity of major cryptocurrencies and physical precious metals is an indication of the world’s discomfort with the unrestrained monetary policy of global governments and central banks. Rational assessments of global debt levels conclude that their current rate of growth is unsustainable.

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This is where digital tokenization and MCon’s expertise come into play. Our company can secure an efficient means of transferring ownership of base metal reserves held in central warehouses via tokenization to allow for their broad use as a store of value and medium of exchange, despite the requirement for extensive storage space. Now that BitCoin has demonstrated that there is a demand for alternative currencies, and the availability of physical gold and silver has diminished, investors are seeking the next stable store of value. Base metals, as suggested by the economic theories of Hayek, are exactly what investors seek.

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