Digital Precious Metal Token for Direct Ownership
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Current investment vehicles for precious metals, such as ETFs and mining shares, pose risks due to counterparty risks, lack of direct ownership, and inefficient conversion to physical metals, while direct ownership involves high premium costs and storage issues.
Innovation Solution
A computer-implemented precious metals investment product that allows for direct ownership with electronic tracking and pricing, eliminating the need for a third-party trust entity, enabling efficient diversification and real-time pricing with options for delivery or liquidation.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If direct ownership of physical precious metals is pursued, then full ownership and elimination of counterparty risk are achieved, but premium costs over spot prices, custody arrangements, storage costs, and security requirements increase
Solution Approach 1:
The patent creates a digital representation (token) that copies the value and ownership rights of physical precious metals. This digital token allows investors to own precious metals without physically possessing them, eliminating the need for physical custody arrangements while maintaining full ownership rights and eliminating counterparty risk through blockchain-based verification.
Solution Approach 2:
The patent replaces the mechanical system of physical storage, security, and custody with an electronic/digital system based on blockchain technology. The physical handling, storage facilities, and security personnel are substituted with cryptographic verification and distributed ledger technology, dramatically reducing complexity while maintaining reliability.
2Reliability
If physical precious metals are taken into personal possession, then direct ownership is achieved, but theft protection and security requirements increase
Solution Approach 1:
The patent creates a digital token that replicates the ownership attributes of physical precious metals. This digital copy enables direct ownership verification through cryptographic means without requiring physical possession, thereby eliminating theft risks while maintaining the benefits of direct ownership.
Solution Approach 2:
The blockchain network acts as an intermediary that verifies and secures ownership rights without requiring physical possession. The distributed ledger provides a trusted intermediate layer that confirms ownership and facilitates transfer without exposing the investor to physical security risks.
3Ease of operation
If physical delivery of precious metals is made to break the chain of custody, then direct possession is achieved, but assay costs and return to depository requirements increase
Solution Approach 1:
The patent uses digital tokens to represent precious metals ownership, allowing direct possession and transfer of the digital representation without physical delivery. This eliminates the need for assay procedures and return to depository, as the digital token itself serves as the proof of ownership and can be transferred instantly.
Solution Approach 2:
The patent changes the state of the precious metals from physical form to digital representation form. This parameter change from physical to digital enables instant transfer and possession without the time-consuming processes of physical delivery, assay, and return to depository.
4Ease of operation
If investment vehicles like ETFs and mining shares are used, then ease of trading is improved, but counterparty risks and lack of direct ownership arise
Solution Approach 1:
The patent creates a digital token that copies the value of precious metals while maintaining direct ownership rights. Unlike ETFs and mining shares that represent indirect claims, the digital token provides direct ownership verification on the blockchain, eliminating counterparty risk while preserving trading convenience.
Solution Approach 2:
The blockchain serves as a trusted intermediary that enables direct peer-to-peer trading of precious metals representation without requiring traditional financial intermediaries like ETF providers or brokerage firms. This eliminates counterparty risk associated with these intermediaries while maintaining ease of trading.
5Adaptability or versatility
If diversification across precious metals is achieved through traditional vehicles, then investment spread is improved, but conversion to physical metals becomes inefficient
Solution Approach 1:
The patent creates digital tokens for different precious metals that can be held in diversified portfolios. When physical conversion is needed, the digital tokens can be redeemed for corresponding physical metals efficiently, as the digital representation maintains a direct 1:1 correspondence with the physical asset, unlike traditional vehicles that require complex redemption processes.
Data Source
AI summary
In accordance with the principles of the present invention, a computer-implemented precious metals investment product and process for pricing a precious metals composite product are provided. A measured unit of trade is established. The measured unit of trade comprises a plurality of precious metal components. The measured unit of trade is quoted and traded as a unit, thus allowing for uniformity in the ongoing offers to buy and sell a fixed quantity, or multiples of this fixed quantity, and pricing consistency for the metals. The precious metals components are backed by physical precious metals. The precious metals components are electronically tracked and priced in live market prices. Live pricing of the precious metals composite product is provided utilizing the live pricing of the precious metal components. An investor retains the option to take delivery of their precious metals or to liquidate by a plurality of methods.