Can a Coin Backed by Gold and Startups Gain Value Over Time?

Host: Last week Coinbase stopped supporting the gold token Pax Gold for its European retail customers because it lacks authorisation under EU crypto rules. Experts say it is a sign that gold on a blockchain still faces a serious regulatory test. One founder wants to go further, with a coin backed by gold and stakes in startups designed to gain value over time. Joining us is Jack McInerney, founder of Renewal Coin. Jack, great to have you on the show.

Jack McInerney: Great to be here.

Host: Your whitepaper calls Renewal a stable growth coin. A stablecoin is supposed to hold steady and yours is designed to rise. So which promise comes first, and if it rises, why would anyone spend it?

Jack McInerney: We always had a bit of an issue with the word stable. It is really not a stablecoin, it is a pegged coin. You are pegged to something else, so think of it as trading pairs. Whether you are pegged to USDT, the dollar or Paxos gold, you are at the mercy of what you are pegged to. If you are a bit of a historian, you know that most, if not all, fiat currencies eventually go to zero. There are no 200 year old currencies, so to say they are stable implies they will remain level in some form, and they are not. They sink or rise with what they are pegged to. What we designed is the world's first deflationary currency, which actually gains assets, and hence value, over time, externally rather than internally, if that makes sense.

Host: You are pairing gold, the classic safe haven, with startup equity, one of the riskiest assets there is. If three out of four of those startups fail, what happens to the coin?

Jack McInerney: What if 95% of them fail? It is not the success rate, it is the cost basis. What does it cost us to acquire those? We took a gold backed crypto token, based on the Swiss franc of the last century, put a community funding Shark Tank on top of it, and buttressed it with crowdfunding. So our cost of acquisition is basically zero. Whether we get a thousand pieces of startup equity or dozens, our cost base is zero. As long as the success rate is over 1%, and we think it will be over 40%, which is the average of the other 32 active Shark Tanks in the world, it adds value to the token over time.

Host: The biggest gold token in the world just lost its European retail access on Coinbase over authorisation. What makes you confident a newer, more complex coin can clear that bar?

Jack McInerney: When people think of crypto, they think of one ecosystem as opposed to its three major constituent parts: there is the blockchain, there are tokens which sit on blockchains, and there are exchanges which move them. We are not a blockchain and we are not an exchange. It is exchanges that get regulatory clearance. Depending on who is counting, there are 2.5 million to 2.5 billion minted tokens in the world, and most of them have never gone through a regulatory process. They go through an exchange process, which gets regulated. So as long as an exchange will trade us, we do not carry that burden. It is shifted to the exchange side.

Host: Buyers at your ICO will share in startup equity, which many regulators would call a security. Have you registered or got a legal opinion, and where will you launch?

Jack McInerney: We probably have the largest startup board in the history of the industry. We have over 35 members on our board, and six of them are lawyers, four are doctors and two are accountants. I personally have 12 cousins who are lawyers, and four of them are judges. If I have learned nothing else, it is to avoid lawsuits and courtrooms when you can. Again, the regulation falls on the exchanges, not on the token level. We purposely structured it that way.

Host: As I understand it, 80% of the money raised goes into gold. Can a holder actually exchange a coin for gold, or only sell it to another buyer?

Jack McInerney: When you look at the value of a token, think of it as a thermometer. With Bitcoin, Ethereum, Litecoin and other coins, the thermometer is totally blue, because it derives all its value from being on the blockchain. With a stablecoin, it is whatever the underlying is. With us it is tri coloured. The bottom part is yellow, the amount of gold. As the coin rises, the actual percentage value of the gold will shrink, which is a good thing, because it means your token is going up in value. The middle part, green, is equities, then a little cash, and whatever is left is blue, what accountants call goodwill. The amount of equities will grow over time. The American Shark Tank has 23 new shows per year, showing 87 projects out of 20,000 applications, with an audience of 2.5 million. We will have ten projects per show, one a week, or 50 a year, or a total of 500. We think we will fund 95% of them, but even if it is only 60%, we get 300 pieces of equity per year, 3,000 per decade, and on and on. So we designed it as a non profit university model where it is perpetual.

Host: Who will actually hold the gold, who will audit it, and how often will holders see proof?

Jack McInerney: We will use Swiss bank vaults. Switzerland has not been in an external war since 1295, and we love that track record. Other countries, especially the US, have a history of confiscating gold from their citizens. Read Executive Order 6102, signed by Franklin Roosevelt in 1933, where they just took everyone's gold. Switzerland does not have that, so Paxos has that threat over them, Perth Mint has that threat over them in Australia, and then there are the three Nigerian mines. Good luck there. We will audit the gold in the vaults every three months. We will also have a lottery among token holders where we fly a token holder, once every six months, to the gold so they can personally inspect it. We are going to give them a little die with a little hammer with their initials on it, so they can tap a few bars of gold to prove they were there. When the next person comes, they will see the previous token holder's mark. We are the only gold repository that will allow an actual token holder to see the gold, and we will fly them there.

Host: You have built Hindu, Christian and Muslim versions of the coin. What actually differs between them, and how do you make sure people buy on the numbers, not on trust in their community?

Jack McInerney: When you issue a coin, it is a two part exercise, mechanical and cultural. The mechanical side is you mint, you list, you trade, and away you go. The cultural side is who your audience is. We looked at Bitcoin, which is basically 30 whales and 100,000 very lonely young men living in their grandmother's basement listening to metal music for 30 hours a week, tapping on keys, who have never met each other. For us, a community is people who dress the same, talk the same, eat the same, worship the same, have centuries of history of protecting one another and, most importantly, share a common persecution complex. They think the world does not like them, understand them, or wants to get them. We wanted a community of over a billion people, and we found four communities: Muslims, Hindus, Christians and Catholics. We are not religious coins and we are not theologians, we are cultural coins. I personally have read the Bible cover to cover, and the Quran cover to cover, from the cow to mankind. Both mention inheritance, money management and mismanagement of money more than they mention religion. They are basically how to live your life manuals. The Prophet, peace be upon him, went to Medina, went to the bazaar, and there are endless stories about this. So we are the commercial side of the tribal culture, not the religious side.

Host: Thank you very much for telling us all about Renewal Coin. I know you launch in 90 days, so we wish you the best of luck, and we hope to have you on the show again very soon.

Jack McInerney: If you would like to contact me, my email is above my head. God bless. Thank you.