The Tiberius Coin uniquely sits at the intersection of cryptocurrencies and traditionally financial markets, pioneering the realm of commodities-backed tokens. The Tiberius coin is redeemable for physically deliverable metal, giving it an intrinsic value and therefore a price floor. An identical and publically disclosed basket of metal underlies each Tiberius coin – so each token is the fungible. The metal underlying each token provides exposure our three strategic commodity themes: the technology metals growth story (copper, tin), the Electric Vehicle/EV play (cobalt, nickel, aluminium), and stability metals (gold, platinum, palladium).
The Tiberius coin in essence boils down to less price risk than other cryptocurrencies. Although the metal-backed cryptocurrency has multiple applications and users of varying background, the Tiberius Coin begins and ends with being safer. Safety means both stability and security. More “stable”, given there is less price risk during normal trading:
- The Tiberius Coin has a market price which is (1) less volatile than other cryptocurrencies, and (2) can drop by only a limited amount – this is because the market price of the token is supported by the intrinsic value of the underlying metal.
- Even in the case of a collapse of several cryptocurrency exchanges or metal markets, the underlying metal is always 100% collateralised and therefore a secure storage of wealth.
Decentralising the “risk-of-theft” of a token (digital asset) The blockchain decentralises the “risk-of-theft” of a token (digital asset), reducing the need for a trusted third-party. The utility of the blockchain can be thought of as a decentralised auditing solution for digital assets. Decentralising the “risk-of-theft” of the metal (physical asset) The use of multiple competing service providers decentralises the “risk-of-theft” of the metal (physical asset), because the collateralised asset is audited by independent parties and stored across multiple warehousing companies globally (i.e. decentralised). Integrity and security is paramount at Tiberius as we are regulated by FINMA (Switzerland) and the SEC (USA).
The price of a Tiberius coin should not stay far below the intrinsic value because of economically rational incentives. Tiberius and other market participants will always be willing to buy a Tiberius coin in the market for almost as much the underlying metal can be sold for (i.e. the intrinsic value). When the Tiberius coin is too cheap you can buy the undervalued token in order to obtain the metal, which can then be sold higher at a profit (this is called “arbitrage”). “Free money” doesn’t exist for long – as competition increases so does the strength of the price floor.
First and foremost, the purchase of the Tiberius Coin constitutes a final sale of metal to the owner of the token. The token itself is an identification document which identifies the respective metal held under a global certificate for the benefit of the owner of the token. Price Waterhouse Coopers audits the inventory on a quarterly basis. Further Tiberius Asset Management, a FINMA regulated company is contracted to manage the stock on the basis of an asset management contract.
Even if you can’t transport metal there will always be an investor who can. It is the job of investors to keep markets efficient, not regular people. Investors support the price floor, not customers. If prices fall too much below intrinsic value there should always be an investor in the market who will be willing to pay buy it at a higher price. Think about currencies, or when you buy gas to fill up your car: regular people only make up a small portion of the market and it is the investors who act on a much larger scale who keep prices stable.
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This composition has been specified to optimise the risk profile, volatility, and cost of carry of the underlying basket. We firmly believe this basket to be one which outperforms over the medium term, as the implementation of new technologies such as robotics, drones, and wearable technology become more prevalent. Investors in cryptocurrencies are by their very nature forward looking, and we see the technology metals growth story as being a key driver. In terms of the Electric Vehicle/EV play, we have already seen a great appreciation of key battery metals (notably cobalt) and much of the future growth projections for other base metals (notably nickel and aluminium) incorporate a view which sees much more demand stemming from Electric Vehicle proliferation. Stability metals have been chosen to lower the cost of carry and decrease volatility. The usage of gold also provides enhanced liquidity and protection against currency risk.
Each token will be collateralised by the same identically defined basket, and therefore is entirely fungible as each token is backed by the same allocation of metal. The basket will not be actively managed and the intention will to be to keep the metal underlying each token static, although may be modified for operational reasons.
Investors: the Tiberius coin provides exposure to the cryptocurrency market but is designed to have a price floor which means it can never, and will never, go to zero or be exposed to the same risks as traditional cryptocurrencies.
- Why cryptocurrencies crash and are correlated: there is a huge bottleneck between cryptocurrencies and fiat currencies (e.g. USD, EUR). Only a few cryptocurrencies can be exchanged for fiat, driving huge price drops when these few crypto-to-fiat liquidity channels become distressed.
- Cryptocurrency market hedge: the Tiberius coin is not only more stable in price, but it solves the biggest problem in the crypto market, namely crypto-to-fiat liquidity. The Tiberius coin is not only easily exchangeable for commodities, but the commodities themselves are uncorrelated to cryptocurrency markets.
- Cryptocurrency market participation: we are in the midst of the legitimisation of cryptocurrencies as an asset class, which means a huge inflow of institutional capital. The Tiberius coin risk profile perfectly lends itself as an investment vehicle for funds, family offices, and high net worth individuals. The Tiberius coin is an excellent sales pitch for the new entrant money manager desiring crypto exposure; an investor who has less trust in crypto than millennials but has a lot more capital.
- Wealth management tool: if you combine the previous points you see that the Tiberius coin provides ideal exposure to a de-correlated, inflation hedged, currency hedged basket of metals – perfectly combining investment solutions with consumer finance
- Consumers of metal:Tiberius coin offers value for metal traders and corporates alike. For example, treasury departments of large automotive companies traditionally sit on a lot of cash yet continually consume metal.
As the underlying metal is fully collateralised, you are exposed to minimal counterparty risk. All metal is stored and audited by independent third parties in a segregated manner, meaning that you have direct ownership of the material independent of Tiberius.
Technology metals: 25t copper, 5t tin Electric Vehicle metals: 1t cobalt, 6t nickel, 25t aluminium Stability metals: 100toz gold, 100toz platinum, 100toz palladium
The Tiberius Coin offers utility to all players previously mentioned. Most uniquely, it provides a fantastic hedge against broader cryptocurrency market crashes, as the price is supported by the underlying metal and is independent and de-correlated to cryptocurrencies. Commodity can grant a new crypto-to-fiat liquidity channel by acting as an intermediary, where metal markets are liquid enough to absorb any heavy crypto selling.
Tiberius is a leading global commodities asset manager, mining operator, metal merchant trader, and Commodities Technology (ComTech) investor based in Zug, Switzerland. Our domicile of Zug has long been a centre for commodities trading, but has recently also gained a reputation as a blockchain hub and is affectionately known as “Crypto Valley”. Tiberius’ history goes back to 2005 when we launched Europe’s first actively managed commodities fund, which eventually grew to US$ 3bn in assets under management. Commodity and financial market participation has been central to Tiberius for over a decade and a venture into the world of commodities backed cryptocurrencies is a natural extension of Tiberius’ core competencies. Tiberius is regulated by FINMA (Switzerland) and the SEC (USA).
Delivery of the underlying metal is done by “cancelling” the token using the Tiberius Coin app or website. Simple instructions, which are secured using the blockchain, instruct Tiberius to make delivery of the metal. The token will also be removed from circulation as it is no longer collateralised (hence “cancelled”). The former holder of the token will now be entitled to receive the physical material but has forgone ownership of the token. This entire process is decentralised using smart contracts. Each token that is cancelled decreases the total number of circulating tokens.
Warehouse fees for the first year will be paid up-front at issuance. Tiberius understands that it is necessary to pass on full storage fees to token holders (which should be less than 2% p.a.) in order to prevent large commodities trading houses from purchasing tokens as a way to store metal for free. The less than 2% annual cost of carry of the metal is below long term inflation targets for developed economies, justifying the warehouse fees as necessary in protecting the notional value of your holdings over the long term (protection against inflation).
Refined metals are of high value, dense in volume, are easy to store and non-perishable. Liquid metal markets allow for a storage of value which is independent of any central bank.