VeraOne is a token, called VRO, whose underlying component consists entirely of physical gold stored in a highly secure area.

VeraOne is distinguished from other crypto-assets by a 100%-backed counterpart (1: 1) verified by a regular audit and relying on the more than ten years of expertise in the precious metals sector of its promoters.

VeraOne has multiple objectives, as it offers:

• a stable asset that can be used as an arbitrage tool or store of value, unlike other existing cryptocurrencies;
• an exchange currency to facilitate the issuance or receipt of securities at a reduced cost and instantaneously, even in the absence of a bank transfer;
• a secured asset to retain value, with full consideration of the dematerialised asset that constitutes the token;
• an easy method of payment, backed by a debit card payment system.

VeraOne’s objective is to promote the development of an ecosystem in which it has been actively involved for many years, to promote its use and facilitate transactions, and to make gold not only a reserve value, but also an exchange tool for the benefit of as many as possible. The security provided by a 100% counterpart asset, as well as the reliability and traceability inherent in the blockchain system, will make VeraOne an ideal exchange currency.

The document below presents the VeraOne project.

The craze for tokenisation

Towards the end of November 2013, the price of Bitcoin (BTC) reached that of an ounce of gold, a highly symbolic threshold, and thus attracted the interest of a large number of market players. Not unlike the digital currency, E-Gold, launched in 1995 and backed by a gold counterpart, the emergence of new crypto-assets has renewed interest in the digitisation of gold. At the time, E-Gold had grown exponentially, bringing its number of users to over one million. We are convinced that it will be the same for the tokenisation of gold.

So blockchain constitutes a new paradigm to not be overlooked. Despite being often perceived as the infrastructure of speculative assets whose technological interest is poorly understood by the general public, blockchain nevertheless offers fundamental innovations:

• a full traceability of transactions, essential to meet regulatory requirements;
• the possibility of peer-to-peer exchanges, without the involvement of a trusted third party;
• an optimal level of security regarding custody, with multiple wallet

The introduction to the white paper by Satoshi Nakamoto, the founder of Bitcoin, is revealing in this regard:

“Internet commerce has come to rely almost exclusively on financial institutions that serve as trusted intermediaries to process electronic payments. While the system works relatively well for most transactions, it still suffers from inherent weaknesses generated by such a trust-based system. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions. The inability to have non-reversible payments for non-reversible services results in an even greater cost. With the ability to reverse transactions, the need for trust increases. Merchants must be wary of their customers, hassling them for more information than necessary. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party”

Financial institutions, well aware of the danger hanging over their monopoly position, are now seizing on the subject. Tokenisation is a form of registration in a securities account since it amounts to issuing a cryptographic token constituting a financial security. Such an operation can represent efficiency gains in both the issuance and management (transfers, monitoring, etc.) of these financial securities. An alternative to the custodian’s securities registers, blockchain enables immediacy, traceability of transactions (fight against money laundering and fraud), free operations and even the inviolability of the system. In this regard, a number of other actors are following the path initiated by Bitcoin, like Facebook with the Libra project launched in June 2019. Irrespective of the future success, a dynamic has been initiated and the VeraOne project is directly in line with Satoshi Nakamoto’s ambitions.

The reappropriation of currency in the face of uncertainty

Even more than its transactional utility, it’s the very reappropriation of currency by the individual that’s at stake. Friedrich Hayek, a Nobel Prize winner in Economics in 1974 for his work on the monetary theory, already asserted that economic crises were directly linked to expansionary state monetary policies, thus distorting the system of relative prices within the structure of production.

This last consideration is all the more topical as it echoes the many expansionist policies, particularly monetary policies, pursued in the West for over 10 years. Although necessary in times of crisis, the maintenance of such policies is a source of disastrous side effects. In a world with zero interest rates, in addition to soaring real estate prices and the ensuring media craze, above all it’s savings banks and life insurance companies whose business model becomes inoperative, as this model is primarily based on the bond market. Furthermore, banks and businesses that should have collapsed are artificially kept alive by perpetual debt mechanisms, comparable to debt Ponzi schemes in this regard. Finally, it’s nation-states that have, through the printing press mechanism, shielded themselves from the disciplining effect of the markets.

Similar to the “Lost Decade” in Japan in the 1990s, the specter of a “liquidity trap” is thus looming over Europe, namely the arbitrage of consumers towards the hoarding of currency resulting in a de facto zero level of investment. For economic agents and individuals, the choice would therefore be to maintain their holdings of currency under all circumstances and thus take advantage of deflation, or even hope for a rise in interest rates, until they can achieve a satisfactory return. A deflationary spiral then becomes a real concern, with the possibility of an immeasurable loss of value for individuals: a postponement of purchases and investment, reduced wages and a fall in production and consumption.

To guard against such pitfalls, gold constitutes an excellent store of value, especially in deflationary periods. The analysis conducted by Roy Jastram in The Golden Constant is revealing in this regard. By identifying three of the greatest deflationary periods, namely 1814-1830 (16 years), 1864-1897 (33 years) and 1929-1933 (4 years), he observed that gold is the only monetary parameter that has remained constant. Roy Jastram concludes that during times of severe deflation, the operational value of gold increases. He also notes that gold maintains its purchasing power for long periods (half centuries), not because the price of gold follows those of commodities, but because the price of commodities is consistent to that of gold. Recent comparative analyses between gold and oil thus confirm this postulate.

Therefore, being the only currency without counterpart risk – unlike paper currencies based on debt – gold becomes an unrivaled instrument of exchange and conservation of value in times of uncertainty. Our conviction is therefore towards the democratisation of gold, namely to enable individuals to secure their wealth and protect themselves from fluctuations, economic cycles or current monetary policies. In our opinion, accessibility is decisive to achieve this. Beyond conventional solutions, which we have supported for more than 10 years as the leader in the French market for the sale and purchase of gold, it’s now a matter of taking advantage of a major technological innovation, blockchain protocols, to facilitate access to the ownership of this timeless asset.

Crypto-currencies as a complement

We are convinced that cryptocurrencies are not intended to replace sovereign currencies, but rather facilitate their use and offset their deficiencies. The future of cryptocurrencies therefore does not lie in their universal usage, but in their concrete application for specific uses. As trading instruments par excellence, they are intended to replace traditional markets (like FOREX) in which a trusted third party was necessary – until now.

To do this, these markets, above all, must free themselves from their speculative nature, which skews their purpose and diverts their uses. The speculative bubble at the end of 2017 eroded the confidence of many actors in an innovative technology and diverted attention from the real innovations brought about by blockchain. However, it enabled us to understand that the general public’s confidence in cryptocurrencies and, consequently, their adoption will necessarily be gradual and tied to confidence in what, at first glance, appears “intangible”. The Internet, anonymity and the ease of information exchange first appeared as a fad before being considered as the Third Industrial Revolution. It will be the same for blockchain.

Now, what type of digital asset is best suited to convince users that stablecoins, these intangible assets, use a counterpart based on assets with stable values? Relying on a market liquidity that is already mature, stablecoins constitute an exceptional new tool in the creation of exchange or reserve portfolios.

There remains the choice of the underlying asset. The wide-ranging experiences of stablecoins, based on public currencies (like Tether) or even on benchmark crypto-assets, have revealed certain risks, largely due to ambiguities in the management of the counterpart asset, and we have seen prices fall below the value of their underlying asset.

We have chosen, based on a conviction supported by years of experience and activity in this sector, to back VeraOne by physical gold. The quintessentially fungible precious metal with timeless value, gold is the ideal counterpart asset to a secure and stable medium of exchange. The VeraOne project, well beyond a mere digitisation of gold, thus carries a vision – that of exchange.

We are therefore fully in line with the vision of Christine Lagarde, President of the ECB and former Managing Director of the IMF, who already noted in March 2017: “Whether Bitcoin’s value goes up or Bitcoin’s value goes down, people around the world are asking the same question: What exactly is the potential of crypto-assets? The technology behind these assets – including blockchain – is an exciting advancement that could help revolutionise fields beyond finance. It could, for example, power financial inclusion by providing new, low-cost payment methods to those who lack bank accounts and in the process empower millions in low-income countries.”

In an apparent paradox, given the still far too speculative use of cryptocurrencies, the issue of the cryptocurrency volatility is nevertheless decisive. The first obstacle against its massive adoption by companies and individuals is that the volatility of the benchmark trading instrument must be contained.

It is still unthinkable, other than by the pure effect of marketing, to imagine that an e-commerce site could accept Bitcoin or Ethereum as a means of payment since the site itself faces suppliers or states (taxes) that still demand legal tender.  The few recent use cases (like Monoprix which, following a notable announcement, stopped accepting Bitcoin in 2015) show that the risk on the margin tied to fluctuations was still far too real. And even in cases where Bitcoin is actually accepted, it’s apparent that a hedge in fiat currency or in stablecoin equivalent is immediately activated.

VeraOne’s stablecoin, on the other hand, benefits from the long-lasting value of gold and its historical stability. Provided that it is held in full ownership, physical gold is an ideal choice to hedge a financial position and protect against excessive fluctuations in value.

According to the World Bank in 2017, the peer-to-peer remittance market abroad concerns 100 million individuals and represents a total transfer amount of around $600 billion annually and close to 4% growth. With an average commission of 7% per transfer, and being able to reach up to 12 to 16% in certain geographic areas, it’s now imperative to rethink these exchanges of value. As a result, we believe that the facilitation of payment methods with instantaneous transactions, the elimination of a trusted third party and the reduction of mandatory commissions would lead to a consequent boom in the market and trading volumes.

With a commensurate conviction, neobanks and various online banks have already devoted themselves to this task. Relying on the traditional financial system, they were unable to offer instant payments and were only able to reduce their commissions through successive fundraising to finance an unprofitable business model. A phase of market consolidation is thus to be expected, with the merger or absorption of many of these same banks and a rise in commission rates once the competition has been eliminated.

VeraOne stablecoin  stands in opposition to these heretofore unsatisfactory alternatives. By using its VRO token, any wallet supporting ERC20 tokens will enable the transfer of value anywhere in the world. Thus, each VRO token will have gold in return (convertible at any time into 1 gram of pure gold for each VRO token) – the gold delivered then being easily convertible almost everywhere in the world into legal currencies, and on several crypto-asset sites.

The regulatory constraint

Faced with cryptocurrencies, the use and nature of which are still controversial today, the retention and use of gold is legally regulated on a global scale. Supervision most often aims, as in France, to prevent anonymous buying and selling.

Security of the underlying asset

The 2008 crisis highlighted the systemic risk weighing on the current banking system. In the event of a failure of the custodian, like Lehman Brother in 2008, It’s difficult to guarantee the value of a token when the underlying asset is on the balance sheet or exposed to the risk of an institution with a solvency ratio of around 8%. Despite being increased in 2016 from 10 and 18.5% in the European Union, we are still a long way from the 1:1 ratio proposed by VeraOne.

Likewise, it is perhaps illusory to think that a stablecoin backed by a basket of currency could absolutely guard against such a risk, even though in the context of the debt crisis, many efforts by central banks were required (e.g. quantitative easing) to maintain the relative stability of currencies in a strongly deflationary economy. Especially since the very preservation of the ingredients in the basket necessarily takes place at the financial institutions themselves and therefore cannot ignore systemic risks, including the domino effect.

For this purpose, VeraOne can benefit from:

• continuous monitoring, relating to the integrity of the system and the computer records;
• the storage of gold at Ports Francs de Genève;
• an annual and exhaustive audit conducted by ALS Global, an expert in the audit of companies working with precious metals, in order to verify that the counterpart asset is at all times available for each user registered in the computer register or in the VeraOne blockchain;
• an audit conducted by the statutory auditors tracing the various purchases and counterparties;
• monitoring done by French and Swiss customs, conducted regularly and without notice, on the consistency between the customs documents (Police Register) and the status of the treasury;
• 100% insured by Lloyds for the value of the gold stock held;
• a security company specialising in the management of safes, with a double validation system (VeraOne and the security company) to access them;
• an audit of the association of users on the procedures and by the mandate of a representative who is present during the conducted audits.

The diversity of the audit and security points, as well as that of the actors performing these audits, is not trivial. If the blockchain guarantees the reliability and security of transactions when exchanging tokens, the same must be true of the underlying asset. Presenting a simple list of the bullion stored in a blockchain and updated in real time is a necessary, but far from adequate, condition.

The objective of VeraOne is to guarantee the user, in the form of a blockchain ledger, the structural impossibility of any deviation, embezzlement or economic risk. The transactions, registers and content of the safes are tamper-proof. All audit and inspection reports are regularly published.

In this regard, many stablecoins on the market do not comply with such procedures.

It seems relevant here to look at the case of Tether, the largest and most famous stablecoin, surpassing Bitcoin since 2019 in terms of daily transaction volume. If a counterpart asset with complete parity with the dollar (1: 1) was the originating idea behind the project, a major change of its backing was made on 14 May 2019 and now includes loans to affiliated companies. In this regard, if the company historically claimed that each coin was backed by a US dollar, the lawyer for Tether Limited admitted on 30 April 2019 that the parity in reality was only 74%, namely (0.74 1). This radical change should be put in perspective with the various scandals that have hit Tether Limited, in particular, over the audit of its reserves. In 2017, the management of Tether had therefore demanded the premature end of the audit procedure that it had initiated because it was deemed “too long and too complex”.

Furthermore, the GTCs of sale even state that Tether Limited does not guarantee “any right to redeem or exchange Tether for cash”. Beyond the GTCs, Tether Limited also states that the holders of Tether have no contractual rights, no legal remedies or guarantees that the Tether will ultimately be exchanged on the basis of its parity.

In a similar vein, since it is subject to US law, the PAX token (guaranteed at 1: 1 with the dollar) has introduced a “setLawEnforcementRole” function allowing authorities (or anyone with access to the function) to manipulate any wallet.

All of these considerations, both in terms of counterpart, audit and regulation, lead us to view VeraOne as one of the only secure solutions on the market. In addition to the various recurring audits, controls and insurance mechanisms that have been implemented as detailed above, the VeraOne token can benefit from an immediate exchange and right of redemption, and rests upon a proven legal basis.

The VRO token has been developed on the Ethereum blockchain and satisfies the ERC-20 technical standard. This corresponds to a smart contract containing a register designating all of the token owners, allowing transactions on them and updating the register with the movements made.

VRO tokens are therefore:

• traceable: the right of ownership is anchored in the blockchain and the register reading ensures the possession of said tokens;
• transferable: VRO tokens can be freely traded over-the-counter with other token holders without intermediaries;
• exchangeable: VRO tokens can be exchanged and sold on any compatible platform against other types of assets (BTC, ETH, etc.);
• stable: backed by physical gold, the price of the VRO corresponds to the price of gold.

Principle

Because the VRO token is a financial security, in most jurisdictions it is subject to the same obligations as any other financial security. The first of its obligations is the completion of a KYC intended to verify the identity of the investors and in particular their capacity as qualified investors. The second is to ensure the source of the funds invested and, in particular, their legal origin and compliance with the international regulations in the fight against money laundering and the financing of terrorism.

Compliance with these requirements involves the creation of a so-called “whitelist” investor register, listing the people authorised to conduct transactions for the securities concerned.

Obtaining a KYC passport

To satisfy the so-called KYC (Know-Your-Customer) and AML (Anti-Money Laundering) legislation, a smart-contract of KYC passports was set up on a dedicated private blockchain.

The investor creates his KYC passport directly on the VeraOne platform, an essential prerequisite to hold gold. Once the questionnaire has been completed and approved, the passport will be available at all times and a certificate (in the form of a token) will be issued to a dedicated wallet.

Obtaining the KYC token will allow the investor to buy and sell VRO tokens (a necessary condition for trading). Without divulging its content, the simple possession of a KYC token will allow the entire ecosystem to ensure that the party involved is properly registered.

Automatic receipt of a dedicated wallet

Once the KYC passport is obtained, a unique and dedicated ERC20 wallet will be created on behalf of the investor.

Primary market

The investor can directly buy VRO tokens with Bitcoin (BTC) or Ethereum (ETH). Upon receipt of the purchase order, the corresponding number of VRO tokens is credited to a private account, the dedicated wallet, and the physical gold counterpart is stored in a safe.

The investor therefore is the owner of physical gold, for which the VRO token constitutes the proof of purchase and the token of exchange.

Secondary market

VRO tokens are compatible with most current crypto exchanges.

They can also be redeemed directly on the VeraOne platform as an alternative payment system, or transfer of value, to a third party registered on the platform.

Finally, they correspond to a store of value and can be kept on the wallet dedicated to facilitate the holding of gold, in complete security and traceability.

Gold counterpart and interoperability

Each VeraOne token holder may require the physical shipment of its gold counterpart, in exchange for its dedicated token, which will then be automatically destroyed.