EXCLUSIVE: NoFiatCoin (XNF) founder speaks to media for first time on gold-backed currency
Of the hundreds of bitcoin copycats vying for attention, you can count the revolutionary cryptocurrencies on one hand. I’d argue NoFiatCoin (XNF) belongs in that group.
“Gold is the grandfather of currency, the dollar is the father, and digital currencies are the son,” says Robert Reyes, the coin’s 33-year-old founder in an exclusive interview.
Reyes’ NoFiatCoin mashes together Old World gold with New World digital currencies. Here’s how it works: you buy NoFiatCoins on an open exchange. Then, you can hold them as an investment, use them for goods and services, or reach out to NoFiatCoin directly to redeem your coins for their current market price in precious metals. You transfer them your coins, they mail you gold and silver.
Since its launch in early January, NoFiatCoin’s engendered a wide range of responses from dismissal to disdain to jubilant speculation. Buyers briefly pushed the coin’s value up more than 300 percent in a week of trading.
“I’m really happy about the support we’re getting because it’s validation that we’re on the right track,” Reyes says.
Critics are quick to point out that NoFiatCoin isn’t backed 100 percent by gold and silver. Instead, it’s backed by a minimum of 30 percent of every release. Reyes says one of the toughest aspects of the coin’s design was figuring out how redemptions, backing and releasing the coin would work. Ultimately, he believes that at least 30% backing of every release is key.
“There are three reasons for the 1/3 rule,” he explains. “One, to adjust to the market and have more flexibility. Two, to protect the value of XNF – too much backing at the wrong time can cause the value of XNF to drop dramatically, for example, in an anemic commodity market. At times you will see we will be backed 200%. Three, we accept the benefits that come along with being a cryptocurrency, such as the ‘natural’ value people instill in them due to trust, flexibility and speed.”
It also gives Reyes’ team the ability to adjust their gold and silver holdings (all of which are documented online) if the price of XNF gets particularly volatile. NoFiatCoin’s gold and silver bullion is stored at a number of secure locations around the world.
As of this week, no one has actually redeemed XNF for bullion. That’s surprised Reyes’ team, and it has them rethinking how they’ll staff and rollout their redemption network.
“We had somebody testing us,” Reyes says. “It was three days after we started. After we asked for shipping information, he said it was ok. He didn’t want delivery. We’re getting three or four of those a day now. After we get their shipping information (for redemption), they say ‘That’s ok.’”
Buyers are testing the waters to make sure NoFiatCoin actually does what the coin’s originators say it will.
“People should do that,” Reyes says. “We don’t mind it.”
Currently, there’s a $3,000 minimum to redeem XNF for gold or silver coins, but this amount will keep getting lower as their infrastructure grows. Whether or not a buyer chooses to redeem their XNF, trust is key to making the coin work. Reyes hints that the company is close to announcing some major partnerships and insurance programs that should bolster that trust.
“This is something sustainable and durable that will last through the ages,” he says. “It’s not solely for speculation. It’s something that I want people to trust in.”
The origins of NoFiatCoin
When the global financial system began breaking down in 2008, Reyes grew disenchanted with paper money.
“If those financial gurus are so smart, how did they let this financial crisis happen?” he asks. “I call it a financial scam.”
Much like the founders of bitcoin, Reyes see the current global financial system as rigged; one that’s designed to protect corporations, enrich governments and maximize taxation.
“Why is it that certain governments want to have control over you wealth after you’ve been taxed for it?” he asks. “After you’ve contributed to a country’s GDP and paid taxes on your income, shouldn’t you have the right to do with your wealth as you wish? Why is that not allowed? The reason is that they want to know where it is so they can get the next level of taxation out of it – so they can basically steal it. That’s what this whole financial crisis was all about. Money does not evaporate. Who’s holding onto all that money that was supposedly lost?”
His disillusionment with fiat money led him to investments in gold and silver, and later bitcoin. Those holdings would eventually grow large enough to give him the seed money to launch NoFiatCoin, which currently employs a staff of 14 and counting.
The coin’s launch comes at an interesting time. After peaking in 2011, the price of gold and silver collapsed. It’s only been since the start of 2014 that momentum seems to be moving back into the space.
“The interest is back on the market,” Reyes says. “Speculators are already predicting the next jump. We’re hoping we can contribute to that change. We’re aiming and trying to find partnerships that will bring back the attention to precious metals.”
Last week, the company announced it added Octave Bodel to the company’s advisory board. Bodel is on the board of Sudarskis & Partners, an asset management and advisory firm exclusively serving sovereign wealth funds, government-sponsored funds and large institutional investors. Bodel brings real-world experience working across international borders – something Reyes sees as integral to XNF’s future.
So far, 50,000 NoFiatCoins have been released. There will ultimately be 25 million in circulation, but it’ll take years for the company to release all the coins. They’re doing it slowly to prevent extreme price volatility. When I suggested to Reyes that they’re acting a lot like the Federal Reserve, he laughs heartily.
“People have said that,” he says, but in many ways the coin is the opposite of the money getting printed in Washington – XNF is actually backed by something, and that’s why Reyes believes NoFiatCoin has true staying power. In the future, the currency will also be distributed through partners, decentralized exchanges and gateways.
“(With) bitcoin, less than 1 percent of the world even understands it,” he says. “We don’t need the whole world to support (NoFiatCoin) or even understand it in order for it to be a success.”
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