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TABLE OF CONTENTS
EXECUTIVE SUMMARY
The world needs a better, safer and easier
way for ordinary people to save and protect
their money from inflation. And we can
provide that.
Section 1.1 – The evolution from asset-
based currency to FIAT currency, and the
foundation for today’s financial fragility
What is Money?
Section 1.2 – Inflation and the inherent
downward spiral of debt-based currencies
What is a Central Bank?
Why FIAT money is debt
How debt leads to inevitable inflation
What do the economists say about the gold
standard and FIAT currencies?
Where does this leave the ordinary saver
and investor?
Financial control is in the wrong hands
In conclusion
Section 2.1 – Introducing Brickcoin, the
new cryptocurrency savings mechanism
Brickcoin is a new evolution in
cryptocurrencies
Brickcoin is NOT a new version of Bitcoin
Brickcoin is a commercial venture, not a
philosophical attempt to create a new
monetary paradigm
Section 2.2 – Regulation and Brickcoin
Why real estate?
Crowdfunding regulatory frameworks
Section 3.1 – Management and
administration of Brickcoin
How does Brickcoin work?
Who gains from Brickcoin?
Who manages Brickcoin?
Summary of key user features of Brickcoin
EXECUTIVE SUMMARY
The world needs a better, safer and
easier way for ordinary people to
save and protect their money from
inflation. And we can provide that.
Savers and investors face a tough
choice in today’s financially unstable
world. Savings accounts and fixed income
interest accounts are not inflation-proof
and are stuck at record low levels of
interest. More complex investment
products such as hedge funds require
large initial investments, do not offer
ready liquidity and are vulnerable to
bankruptcy.
By comparison, debt-free real estate
has and always will have intrinsic
value, much as the old gold standards
did. We plan to use this to create a new
inflation-proof, secure but flexible
mechanism for ordinary savers to protect
their wealth.
We can provide savers with protection
from the intrinsic risks of currencies that
are supported by debt rather than real,
tangible assets.
We can provide unprecedented flexibility,
economy and ease of use, with the ability
to liquidate savings into cash instantly.
We can incentivize people to save.
Brickcoin - what is it?
Our solution is the innovative application
of blockchain – the game-changing
technology that is impacting on society,
business and government – in the
creation of an asset-backed digital
currency, the Brickcoin.
Brickcoin, so named because it is backed
by Real Estate Investment Trusts (REITs),
replaces the vulnerabilities of FIAT
currency with similar financial security to
the former Gold Standard, and uses this to
offer the growth potential of a robust and
healthy savings/investment mechanism.
How does it work?
By buying Brickcoin tokens, users convert
their FIAT currency into a stable and
protected digital currency that grows in
value in line with one of the most secure
investments in the world, real estate.
And by using blockchain’s crypto-
validation technology, management of the
Brickcoin’s supply and preservation of its
value are made both simple and secure, as
is the user-experience of savers buying
and selling Brickcoins.
Why do we need it?
With Brickcoin we can preserve monetary
value, incentivize growth in safer
investment activity and help more people
to grow their usable savings and in turn
better support global economies.
In this report:
This paper lays out the business case for
developing the Brickcoin concept.
Section 1: First we examine the financial
history that has led to today’s precarious
options for savers. We consider the
ultimate fate for FIAT currencies and the
trap they have laid that prevents today’s
savers from achieving prosperity and life-
time security.
Section 2: We then introduce Brickcoin,
looking both at the key aspects of the
blockchain technology that enables this
innovation and at the rationale for
choosing REITs as the secure asset for
backing this digital monetary mechanism.
Section 3: Finally we present the
practical outline – how Brickcoin works in
practice, which main actors are involved
and how they will be remunerated. As a
conclusion we present the foundations
that are already in place for initiating the
Minimum Value Project (MVP).
Section 1.1 – The evolution from
asset-based currency to FIAT
currency, and the foundation
for today’s financial fragility
Whatever your views on the strengths
and weaknesses of FIAT currencies,
there is an undeniable trend away
from trusting in the FIAT systems and
structures as a safe place to store and
grow one’s wealth. We will share some
expert views from both sides of the
FIAT argument in Section 2. Here,
however, we establish some relevant
historical context.
What is Money?
This paper’s proposition is evolutionary,
not revolutionary. We are not proposing
the whole-scale reinvention of currency
and banking. Instead we offer a modern
interpretation of a centuries-old tradition,
that of building wealth by acquiring assets
of solid and tangible value. And to
appreciate this fully it pays us to take a
brief look back at that tradition’s history
and evolution.
FIAT currency and paper money are not
to be confused. We have used paper notes
for centuries, and, before that, other types
of tokens that represented transferable
value and enabled trade to take place.
They did, however, remain tokens of
value, not items with their own intrinsic
value. Their initial purpose was to allow
traders to travel far and wide, buying and
selling, but with their root wealth –
typically gold or silver - safely locked up
at home. As we shall see, FIAT money is a
token-system but without a solid asset in
the safe at home, hence the need for new
asset-based savings and investment
systems.
1. Commodity money
The oldest form of trading was bartering
– the simple exchange of goods. But if the
desired goods were not immediately
available (perhaps crops that had not yet
matured), an interim token of value was
needed instead. Early tokens were
themselves other commodities – items
that preserved their own value until
needed to complete the next barter. The
shekel is an example, first used in
Mesopotamia (now Iraq) around 3000BC
and represented as a specific weight of
barley. Commodity currencies soon began
to give way to token currencies such as
coins.
2. Metal coins
By c.1000BC, small bronze items in the
shapes of domestic tools were used in
China as a forerunner of the coin. Within
three hundred years, the first minted
metal coins were being produced in India,
China and the Aegean. However, there
was no common standard and no shared
valuation of the metals used until the
discovery of the touchstone assaying tool
that enabled any soft metal to be tested
for purity.
3. Gold and silver
Gold, being a soft metal and in scarce
supply, became the favourite choice for
coinage, offering a measurable and
consistent value. Silver was also popular
in many European countries but during
and after the Crusades gold became the
norm.
Early metal coins were valued on the
basis of their weight, an indication of the
quality of the metals. But, as countries
standardized their gold coin manufacture,
the coins began to be regarded as a unit of
value as well as a unit of weight, an
important moment in the evolution of
money.
4. Credit and Bills of Exchange
In the late Middle Ages, European trade
was expanding at a rate that required a
system of credit, one which happened
also to take a big step towards the
introduction of banknotes.
Bills of exchange, or trade bills, were
exchanged for goods as a promise of
payment in the future. The seller would
then present these bills to a merchant
banker either in their own town or
elsewhere and redeem them for money.
Alternatively the seller could in turn use
the bills as currency to purchase other
goods direct.
5. Promissory Notes and early
reserve banking
By the early 1600s, wealthy merchants in
England stored their gold in the Royal
Mint. But after Charles I of England’s
confiscated this as a forced loan,
merchants began to store their gold
instead with the goldsmiths of London.
They paid a storage fee, and were issued
in return with a receipt a promissory
note.
Over time, the goldsmiths developed their
service by relending on behalf of the gold
depositors. While these loans were
repayable over a long period, the original
promissory notes were payable on
demand and hence could be used as a safe
and convenient form of money, the
forerunner of the banknote. And as gold
deposits were relatively stable, they could
be relied on to support the integrity of
this currency system.
6. Banknotes
Banknotes emerged as a formalized
version of promissory and other forms of
credit note. China having first started to
use printed notes in the seventh century,
the Song Dynasty government, some 500
years later, realized the economic benefits
of printing and controlling paper money.
In Europe, the first proper banknotes
were those issued by the predecessor to
the Bank of Sweden, Stockholms Banco, in
1661.
In England some of the great goldsmiths
had evolved into early forms of banks and
begun issuing their own paper banknotes.
Then, in 1694, the Bank of England was
granted sole rights to issue banknotes, a
move copied by the US’s Federal Reserve
Bank much later in 1913.
These early banknotes remained,
however, a representative rather than
independent form of money, the value
continuing to rely on the partial backing
of gold and/or silver.
7. The Bretton Woods
Agreement and the Gold
Standard1
1
Figures taken from:
https://www.thebalance.com/what-is-the-
history-of-the-gold-standard-3306136 accessible
March 2017
By 1933 the US held the world’s largest
gold reserve, President Roosevelt having
ordered all US citizens to surrender their
gold in exchange for dollars. Eleven years
later the global impact of this
accumulation led to the 1944 Bretton
Woods Agreement whereby all currencies
(of the agreement’s member countries)
were valued by one single standard, the
value of gold in US dollars ($35 an ounce).
The immediate effect of this was that
most countries now regarded the US
dollar as the global currency and pegged
their own to its value. As in the centuries
before, holders of paper dollars were
entitled to redeem them for gold, and for
as long as the US held more gold than
there were US dollars in circulation
globally, it could always meet the
demand. But by 1970 this surplus had
reversed dramatically. Now there was the
risk that its gold could no longer back up
the dollar.
In 1971, experiencing huge inflation
during which banks increasingly began
redeeming their dollars for US gold, the
US effectively ended the gold standard by
changing the value to $38 dollars an
ounce. And in 1976 gold and the dollar
were completely divorced from each
other, leading to other countries
beginning to print more of their own
currencies again.
8. FIAT currencies
Since 1971 and the effective ending of any
objective valuation standard, all major
currencies in the world are FIAT
currencies – printed notes that rely on
their issuing governments declaring their
legality and trying to control their value.
FIAT money can enable the transfer of
value – trading goods and services,
acquiring possessions that have an
independent value – but, lacking a
backing asset other than debt (see Section
1.2 below), the printed notes are not in
themselves of any value. And, as we’ll see
shortly, the governments have relatively
little control over this value. That’s the
privilege of the central banks, discussed
below.
9. What next?
It is remarkable that, after centuries of
effective asset-backed monetary
systems, nearly the entire world now
operates a FIAT system. This means
that almost everybody’s wealth is
measured by a standard that exists
only because governments declare its
legitimacy. Many economists see this
as a fundamental flaw that will lead
ultimately to financial collapse, an
argument explored in detail in Section
Two below.
Section 1.2 – Inflation and the
inherent downward spiral of
debt-based currencies
The background to this paper’s
argument can be expressed in a single
sentence:
FIAT currencies are a financial illusion
managed by central banks, tricking
savers into believing they are
accumulating wealth when in fact the
value of their money is continually
decreasing thanks to inflation and debt.
This is a strong statement and needs
examination and justification, as well
as some counter-argument to provide
a balanced field for discussion.
http://www.investopedia.com/terms/c/centralba
nk.asp - accessible March 2017
But they also have one supreme
weakness. The money supply they control
is FIAT money. This means that they deal
in debt, not in assets.
Why FIAT money is debt 3
Peter Joseph is a visionary film-maker
(known for his Zietgeist film series) and a
proponent of a resource-based global
economy. At its root lies the logic that by
producing only what we need, and
creating financial systems that exist solely
to enable this, we eliminate poverty and
deprivation without sacrificing
entrepreneurialism.
What has this to do with FIAT money?
Joseph draws on some authoritative
sources for his argument, including the US
Federal Reserve Bank’s own work,
“Modern Money Mechanics4”. In essence
3
Derived from: Zietgeist Addendum; Peter Joseph;
2012;
https://www.youtube.com/watch?v=HbvCxMfcKv
4&t=924s, accessible March 2017
4
https://archive.org/details/ModernMoneyMecha
this describes the FIAT-based fractional
reserve banking system whereby when a
bank lends outwards, it actually increases
its assets as a consequence. This
contradicts both logic and the natural
law; across maths, science and nature,
there exists the striving for balance – loss
is balanced by gain. So how can a bank
gain assets by giving them away?
The answer is that those assets do not
really exist. Joseph offers a simple
illustration summarized thus.
1. The US government needs to
borrow 10 billion dollars and
approaches the Federal
Reserve.
2. The Fed agrees to supply this
in exchange for 10 billion
dollars of government bonds.
But what are these government bonds?
The answer is pieces of printed paper that
claim to have a value – 10 billion dollars
of value. And the Fed actually purchases
these using its own pieces of printed
paper, Federal Reserve Notes. So:
9
Jason Fernando;
http://www.investopedia.com/articles/forex/051
215/gold-standard-versus-fiat-
currency.asp#ixzz4QY05h5t3 accessible March
2017
conversions of paper money into gold.
There is a persuasive logic to this
mechanism for preventing bad policy and
risk-taking. Yet today there is not one
single gold-based currency in the world.
Why?
‘On the other hand, one of the most
common arguments against the gold
standard is that it unnecessarily restricts
governments’ ability to perform economic
stimulus during recessionary or
depressionary times.’
Numerous factors between WW1 and
WW2 put the classic gold standard under
strain, and it was arguably only the
Bretton Woods agreement of 1944, basing
all national currencies on the US dollar,
itself pegged to a fixed gold price, that
allowed the gold standard to continue.
Ultimately, the need for governments to
be able to stimulate economic recovery by
printing money led to the final downfall of
the gold standard. And this need remains
stronger than ever today, suggesting that
any return to a gold standard is
impossible.
Yet some argue that it is the FIAT system
itself that has fed this need – hence a
vicious cycle with no solution.
In support of FIAT currencies
10
Clem Chambers:
https://www.forbes.com/sites/investor/2013/04
/29/why-doomsters-who-predict-the-collpase-of-
money-are-wrong/#5427648e1aef accessible
March 2017
fiat money, i.e. money as we know it and an
economic and social breakdown will
follow. Gold and bullets are to be the only
currency.’
Yet he argues that this continual
depreciation is fine. It will not lead to the
ultimate collapse of the system. Instead
we should focus on diluting the debt that
co-generates this phenomenon:
‘The key is to be positioned for the
denouement of current economic rescue
attempts. The solution is the dilution of
debt, through the devaluation of money.
The governments of the west will not run
out of money. That’s impossible. What will
happen to rebalance the debts of the U.S.
and Europe is what we need to focus on.’
However, Chambers goes on to reach the
only intelligent conclusion – that in a
world of ever-increasing supply of FIAT
money the only way to grow real wealth
is to invest in real assets:
‘If you believe the developed world is going
to get into a tail spin, it won’t be that fiat
money will disappear. Instead there will be
much more of it about.
The question therefore is how to play the
outcome of cash flooding everything.
You can do worse than look back to the
seventies to see what happened and use
that period as a model of what to do. The
answer isn’t to prepare for Armageddon. It
is to invest in inflation linked assets
producing index linked yield.’
11
https://www.creditwritedowns.com/2010/10/th
e-fiat-currencies-are-headed-into-crisis.html
accessible March 2017
Galland explains that this race is being
run by competing governments as they
struggle to respond to extraordinary
levels of debt built up over generations of
political and economic incompetence:
‘[The misguided politicians] now believe
that the best approach is to devalue their
currencies against those of their trading
partners. This is in the hopes of gaining a
competitive commercial advantage for
their export products on global markets.’
And it is this cycle of continual
devaluation that must, at some point,
come to an end. There must be a terminal
moment at which this self-defeating race
delivers full-blown economic suicide.
There can be no winners in this
international competition:
‘There’s a long and growing list of
countries that have either recently
intervened or are currently trying to force
their currencies lower. In fact, in addition
to Japan, both South Korea and Brazil have
just announced what are essentially
exchange controls on money coming into
the country from foreigners. By raising
taxes on foreign investments in their bonds,
they hope to reduce the inflow of foreign
purchases, which otherwise help keep the
local currency strong.
This race to the bottom cannot end well.’
12
Derived from: Zietgeist Addendum; Peter
Joseph; 2012;
https://www.youtube.com/watch?v=HbvCxMfcKv
4&t=924s, accessible March 2017
home by the lending bank, challenged it
on the basis that the money loaned to him
was never in fact the property of the bank
but rather a promissory note. The bank’s
president had to admit that the money
and credit were created through
bookkeeping entries, saying: “Only God
can create something of value out of
nothing.”
Joseph explains that the legal implication
of this landmark case is that any money
borrowed from the bank is effectively
counterfeit, as the bank never had the
money as property in the first place.
So why does the practice continue?
That is far too big a question for this
paper. Nevertheless, the legal case aptly
illustrates how our modern banking
system means that the ordinary person’s
current wealth and financial viability
relies on shadow money, not real assets.
And for that ordinary hard-working
person, their real-life experience is the
loss of their own money’s usable value,
now and looking ahead into the future:
‘Money has value because people believe
that they will be able to exchange
this money for goods and services in the
future. This belief will persist so long as
people do not fear future inflation or the
failure of the issuing agency and its
government.’13
In other words, as soon as governments
fall, banks fail and inflation spirals due to
what is broadly seen as financial mess,
that belief evaporates.
And it is already happening as people
increasingly predict a diminishing
future for their money.
The dependable and safe savings
mechanisms of the past, driven by the
near-double digit interest rates, are
consigned to history books. Today, the
sense of increasing inflation, driving
down the real value of the money that
people hold, makes them want to get rid
of it before it becomes worthless.
The world order of the last century,
https://www.thoughtco.com/why-paper-
13
https://www.thoughtco.com/why-paper-
14
In conclusion
Ours is not an argument for
fundamentally redesigning our social
construct along left-leaning wealth-
distribution guidelines. Instead this is a
serious, commercial and economic
argument that recognizes how the
conscious choice to ignore the aspirations
of ordinary working people undermines
the entire viability of a functional
economy.
We say that it has to be possible to create
a profitable system that is immune from
the selfish interests of a few shareholders
and, instead, preserves the hard-earned
wealth of people at all levels of society.
Hence the solution, a new asset-based
currency paradigm to re-energise and
strengthen our economies, must be
one that appeals first and foremost to
those whose small but vital
investments will make it happen.
And this is what we now go on to describe
in Section 2.
Section 2.1 – Introducing
Brickcoin, the new
cryptocurrency savings
mechanism
Brickcoin is a new evolution in
cryptocurrencies
There has been a great deal of interest and
innovation in launching new
cryptocurrencies since the original concept
first saw light in the form of the Bitcoin.
Unlike most, however, ours is not an
attempt to rival or supplant FIAT
currencies.
What it is: Brickcoin is a savings scheme
backed by a non-inflationary asset,
commercial debt-free real estate, to
deliver stable capital preservation. As a
cryptocurrency, it enables savers to
convert their money to and from
Brickcoin tokens using the full security
and convenience of blockchain
technology.
Where it sits: Brickcoin will be the first
cryptocurrency that truly bridges the gap
between a) the necessary reliance on the
FIAT currencies and b) the asset-backed
wealth-creation opportunities that are
often out of reach for many ordinary
savers.
How it will earn trust: Above all,
Brickcoin will set new standards of
integrity to users and investors, and this
means addressing the intrinsic flaws of
the Bitcoin concept. So, before examining
each of these goals in detail, we need to
establish one fundamental fact:
16
https://www.theregister.co.uk/2016/07/26/pon
zi_bitcoin_case_kaput/ Accessible March 2017
Abuse of Bitcoin is not confined to the
criminal world.
Bitcoin’s founding principle was that it
should be free of centralized control and
instead offer what is in effect a form of
digitally-driven financial democracy. Its
users were to have equal opportunity to
help maintain Bitcoin and derive financial
reward for so doing. However this has
been corrupted.
Sheer determination and ambition has
allowed Bitcoin ‘mining farms’ to evolve
especially in China where whole teams of
technicians strive to monopolise the
transaction verification that earns
financial rewards. Not only do they deny
this opportunity to individual Bitcoin
users, but they also enjoy unfair influence
over the entire currency mechanism,
undermining the fundamental aim of
being free from centralized control (see 3.
below).
3. Bitcoin’s deliberate avoidance of
centralized control robs it of the
reassurance of visible and
transparent management.
The final mistake in the Bitcoin model is
not a further abuse of its original
principles but a basic design flaw.
The endeavor to avoid the constraints of
centralized control brought with it the
need for randomly-allocated verification
processes (to ensure transactions were
valid and supported by adequate finance).
As far as is possible, the original system
was automated, using encryption and
computer code to prevent fraud.
This effectively robs the system of an
essential layer of confidence in the form
of accountable, hands-on and regulated
audit and management.
17
https://www.fca.org.uk/consumers/crowdfundin
g Accessible March 2017
in this way – we simply need to adopt the
regulatory framework that is evolving
around it to protect our savers and to
regulate due processes.
The UK’s regulatory framework covers
both loan-based and investment-based
crowdfunding. As we shall see shortly,
this makes it especially suitable for
Brickcoin’s twin function – as an inflation-
proof savings scheme and as an
investment-and-growth opportunity.
Adopting this framework will also
facilitate essential processes such as:
● Carrying out online registration
that complies with the different
regulations of each country
● Being able to negotiate fees in
private exchanges that can make
use of the blockchain P2P
technology.
Above all, using the world’s most
respected crowdfunding regulatory
frameworks guarantees the integrity of
the Brickcoin project, both to those
parties investing in it and to the most
important participants, the savers
themselves.
Section 3.1 – Management and
administration of Brickcoin