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Kinesis Yields: Defeating Gresham’s Law

According to Gresham’s Law, when given the choice, people will spend lower quality money and hoard higher quality money, causing the lower quality money to become more dominant in circulation. By virtue of Kinesis yields users are financially motivated to engage in the active spending or trading of gold and silver.

Kinesis yields create a compelling incentive for participants to treat precious metals as a usable, functional currency, rather than simply hoarding them as a store of value. By rewarding active engagement, Kinesis fosters a dynamic ecosystem where gold and silver are continuously circulated, driving real-world utility and supporting the broader adoption of precious metals in everyday transactions.

The Origin and Implications of Gresham’s Law

Historical Background

Gresham’s Law is named after Sir Thomas Gresham, a 16th-century English financier. The theory gained prominence during a time when local currencies were minted from precious metals such as gold and silver.

Practices of the Mints

To reduce costs and increase profits, mints diluted the precious metal content of coins by combining gold or silver with cheaper, less valuable metals. But then they made the mistake of issuing these debased or degraded coins, expecting them to be accepted at the same value as the original, high-purity coins.

Contrary to expectations, the general public could identify differences in quality between the pure and debased coins, adjusting their behaviour accordingly:

• Spending lower-quality coins for everyday transactions.
• Hoarding higher-purity coins, anticipating that their value would appreciate over time.

The Principle of Gresham’s Law

This behavioural shift illustrated the principle that Bad money drives out good money in a monetary system: as individuals favour retaining valuable currency and using the less valuable one, the higher-quality currency gradually disappears from circulation.

Kinesis Solution

1) Kinesis Yields

Kinesis incentivises users to actively spend or trade gold and silver by integrating a unique yield system whereas over 50% of all transaction fee revenue is distributed back to users, creating a strong incentive for participants to use precious metals as a functional currency, rather than hoarding them.

2) Accessibility

The Kinesis Monetary System is built with accessibility at its core: features are designed to make transactions with gold and silver easy for both individuals and businesses, ensuring that users can integrate precious metals into their daily financial activities without barriers.

Broader Impacts

Driving Adoption: The combination of accessibility and the yield system fosters broader adoption of gold and silver as viable mediums of exchange.

Challenging Gresham’s Law: By incentivising active usage, Kinesis effectively addresses the traditional tendency to hoard higher-value currency, disrupting the dynamics of Gresham’s Law and creating an ecosystem where gold and silver are not just stores of value but actively circulate as functioning money.