The asset-backed future of the crypto industry

 

The asset-backed future of the crypto industry
Mohammed Ibraheem Khan, CEO, GoldGuard FZCO

GoldGuard and OneGram are revolutionising the face of Islamic finance by merging gold with digital currency GoldGuard and OneGram are revolutionising the face of Islamic finance by merging gold with digital currency

By Deepa Narwani

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Published: Thu 24 May 2018, 12:00 PM

Last updated: Thu 24 May 2018, 3:10 PM

In January 2017, Islamic financial services and technology company OneGram partnered with GoldGuard, a Dubai-based online gold trading platform, to create the first physical gold-backed digital crypto token. The coin is backed by physical gold and once live 70 per cent of the generated transaction fees from the blockchain will go towards acquiring new gold, which will be distributed to each coin. This, in essence, means the gold reserve is always increasing. This system allows users to be rewarded for spending and contrary to the real world with every spend the value is increasing due to the accumulation of new gold. Further economic value is generated through limited supply since OneGram will only issue 12,400,786 tokens.
Mohammed Ibraheem Khan, CEO, GoldGuard FZCO, said: "One of the main problems that exist in the cryptocurrency world is that there is price volatility. If you look at the charts, the price of Bitcoin in January 2017 was $990, then in a year it went up to $20,000, and now it is back to $8,000. 
"If you have a digital asset like gold, there is a minimum price. It can never fall to zero. We took blockchain, which is the latest technology and gold, which is the first form of money and put it together and regulated our concept by applying the principles of Shariah law."
Over the years, Dubai has established itself as the hub of Islamic finance, and Mohammed highlighted that GoldGuard has been able to take a 1,400-year-old Islamic set of rules and merged it with blockchain to offer a solution that is unique to the market.
By physically backing each OneGram coin with gold, the team has effectively designed a Shariah-compliant mechanism to own gold, transfer it freely and redeem it for the physical commodity at any time. This solution expressed Mohammed, allows gold ownership to be a positive and income-generating asset. With stocks and shares, an investor needs a set amount of money in their pocket. But the attraction of OneGram is that almost anyone can invest and participate.
There are over 1,500 digital tokens, stressed Mohammed, that have copied the model of Bitcoin. They are completely reliant on Bitcoin because to buy any of these tokens you need Bitcoin, so the crypto space is virtually monopolistic, that was however until OneGram entered the race. OneGram is completely non-reliant on Bitcoin, and OneGram purchases do not require the user to own Bitcoin. OneGram today stands alone in a market which is at a crossroad of transition. Another defining characteristic is that besides Bitcoin none of the other 1,500 Alt coins have ever had a real-world transaction. OneGram has again proved otherwise by becoming only the second coin to have real-world transactions as property can be purchased from MAG Lifestyles using OneGram. What makes this even more impressive is that OneGram is not yet live but support is already there from strong business partners.
Reaping golden rewards
One of the biggest criticisms of cryptocurrency has been that the lack of regulation that can lead to criminals using these digital channels. However, this problem exists in the real world as well in the form of cash. Unfortunately, criminal elements will always exist in society but the solution, Mohammed highlighted is not to ban cash, but to put regulations in place. Such regulations have also been put in place for OneGram. "We have put stringent mechanisms in our systems. You cannot open an account without completing the Know Your Customer (KYC) process, and we require proof of address, picture ID proof, and e-mail verification. We run checks on people for political affiliations, blacklists, arrest warrants, etc., so every user is thoroughly vetted. Furthermore, we do not accept cash to purchase our digital tokens so we are taking every precaution possible to self-regulate until such time regulation becomes available."
Mohammed recalled that he did have moments of doubt where he thought, should there even be a Shariah coin? But his resolve was not deterred but only strengthened when OneGram received support from Islamic Scholars.
"We had an Islamic scholar from Malaysia who sent us an e-mail saying, "You guys have changed the digital face of Islamic finance." That was a really big thing for us. Further support was extended to us from a number of leading Islamic institutes. We have lent our support to many organisations including educational institutions to better understand what we have developed and how we achieved this."
OneGram today exists in 17 countries, and surprisingly Germany is one of its biggest markets, and they will soon be operating in India, Malaysia, Pakistan, and Taiwan. Dubai is one of the most prepared countries in the world for this digital revolution, and the Expo 2020 will be met with resounding success, remarked Mohammed. He credited the city with having one of the most advanced smart governments in the world that is far ahead in terms of technology than anyone else in the world.
He concluded: "We have some amazing developments in the pipeline. We have a superior product, and in just nine months we have entered 17 countries. Over 70 per cent of our coin holders are non-Muslims because they see that we have a set of rules and regulations, which first and foremost, protect the investor."



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