Some Karatbars Complexities explained

1 maart 2020


This is once again an article written to try and explain some of the complexities of Karatbars. Based only on my personal opinion and understanding.

Karatbars ecosystem is set up to become a cryptocurrency Bank once the new blockchain is finalized and the ecosystem is fully operational. Corporate did say that in the future they will announce nothing to affiliates until something is 100% in place and functional. This due to Affiliates making too many assumptions and thus causing too much anxiety for others.
Having said that, let’s compare Karatbars to a normal Commercial Bank in regards to assets, liquidity, and securities.

Commercial Institutions
Normal commercial Banking institutions invite the public to invest their savings at an agreed-upon interest rate – The Bank then offers loans and services to other customers using those funds. In addition, they offer mortgage bonds at an interest rate to clients so that they may purchase a property. The title deeds of these properties become assets to the Bank and they, in turn, offer these to the Reserve Bank of the country to obtain the money to complete the transaction. The Bank pays interest on the investments from both investors as well as the Reserve Bank and they, in turn, charge an interest rate to the consumers at a higher rate which makes them their profit.
All of these investments and securities over the mortgage bonds allows the Bank to show them as assets in addition to creating healthy balance sheets for them. The truth however is that should all investors decide to retract their investments at the same time that the outcome would, in fact, be devastating for the institution, leaving them bankrupt purely because not all of the assets are liquid and/or instantly available.

Now let’s look at Karatbars
The money raised in the ICO for both KBC and KCB created capital liquidity for the company. This capital liquidity allowed Karatbars to obtain various assets including 6255kg of gold as well as to develop various products, such as the K1 phone, CEM’S and Whim laptop. They also obtained all the licenses to various gold deposits where the gold is still to be mined.
This allows a healthy assets record and balance sheet even though these deposits are still un-mined and not yet liquid. (No different than the Commercial Bank whose assets are mainly mortgage bonds held as security by the Reserve Bank and also not instantly available cash.)
The value placed on KBC within the ecosystem is based on all these assets. If everyone demanded their gold payout as per the Karatbars valuation and balance sheet then the same principle will apply.
The gold in the ground, although an asset is not instantly available which is why there are restrictions placed on availability. Arguments are regularly made by some affiliates that Karatbars can never pay out gold for all the KBC in circulation that they value at. Ie: 100 KBC equal the value of 1gram gold, is 100% correct. No different than the commercial Bank that cannot pay out all its investors at the same time due to liquidity and mortgage bonds, unless the Reserve Bank intervenes. This is the part where Management has to take decisions and not the 900,000 affiliates all wanting to be the CEO.

Personally, I would rather trust that Management makes decisions based on facts which will, in turn, keep the company liquid and growing, rather than them try to satisfy affiliates who may have no idea of how the impact of certain decisions/ actions could affect functioning, longevity or bankruptcy in a business environment. I am sure that all can agree that it is better to be part of a healthy company than a bankrupt entity. The overwhelming positive part of all the assets in Karatbars is that they belong to the company and not to people who loaned them the money to obtain the assets. It is not a debt, it’s an asset. See your investment in Karatbars as having bought shares in the company. This means that its success and growth as time goes by is also your success. The Commercial Banks’ success and profits belong to the Bank. It does not belong to the clients who make it possible through their investments or loans unless they bought shares. In Karatbars we are part of a growing business entity. On the exchange, you are part of a volatile cryptocurrency market, no different than any other exchange-listed cryptocurrency coin. The KBC coin defines two different business entities altogether.

The only common denominator is the KBC coin and its use. It works in Karatbars as a value token earning fees for services rendered. On the outside exchanges, it is just another cryptocurrency traded on demand and supply principals.

Keep in mind that within Karatbars the price of KBC will always be different than the price on the various exchanges, don’t try and compare the two scenarios. Karatbars Management value and control the internal price based on the ecosystem, whilst the price on the outside exchanges are determined by normal business principals of supply and demand and not by Karatbars. If you don’t separate this in your understanding it will continue to create confusion.
I hope this brings some clarity and understanding.

Neels Crypto is the author of this article, published in the Facebook group Karatbars Gold Directors

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