The Future on Algorand: How Meld is Removing Friction from the Metals Industry

Transcript of interview released: January 13, 2021. Click here to play the video.

Keli Callaghan
Hi everyone, I’m Keli Callaghan. I’m the VP of Marketing here at Algorand. Today, I have the amazing opportunity to sit down with Michael Cotton from Meld, a company down in Australia that’s doing some fascinating things with the gold and precious metals industry.

So before we get started and talk about all of the interesting things that Meld is doing, Michael, can you introduce yourself and tell us a little bit about your background and how you ended up in blockchain and crypto?

Michael Cotton
Certainly. Hi everyone, and thanks for having me, Keli. I started my business really young – straight out of high school I started working in the jewellery industry, which was to a degree, precious metal related, and quite quickly I moved along in the industry and realised that there was a really amazing opportunity in precious metals. In particular, because there had been so little innovation in the space, so little technology adoption, it was kind of like bringing computers to people who were using typewriters. That really resonated with me that this is something where there’s a great deal of opportunity. The little innovation there was, had not been widespread and really had not been adopted on scale – it was quite a closed marketplace with not a lot of sharing of information. So I instantly was really excited about that and started working on innovations in the industry and slowly grew my position within the precious metals industry here in Australia.

It was then a few years ago that blockchain really came to light for me, and being someone who loves innovation and technology, I was instantly attracted to the concept. I sort of struggled for a while to find what fit and it really wasn’t until finding Algorand, and the Algorand blockchain, that I really found that perfect fit for precious metals and the direct ownership of precious metals on the blockchain. And that’s when we really started working on a two-part product, which was a blockchain enabled ownership of precious metals which really allowed gold and silver – but gold in particular – being positioned in the world to be a currency once more. And on top of that, we then combined that with our work innovating the actual supply chain. The really brilliant part about doing that innovation is:

  1. It meant we weren’t creating our own currency, we were creating the digital standards for gold across the planet, which would allow everyone within the gold supply chain to join that network, participate and be a part of the gold currency in its true form.
  2. And by also having that technology innovation of the supply chain it meant gold could be traded, exchanged and used in a faster, more cost effective, more currency-style of use, which is really nice.

It holds up, I would like to talk more about that but I won’t bore you for 40 minutes.

…we were creating the digital standards for gold across the planet, which would allow everyone within the gold supply chain to join that network, participate and be a part of the gold currency in its true form.

Keli Callaghan
That’s great, so effectively there’s two things. There’s one, you’ve got the digital representation – is that the right way to put it? – of gold as an asset; and then two is what that impact has on the precious metal or the gold supply chain and how it can move quickly in comparison to traditional metals?

Michael Cotton
Exactly, and in reality, it was just the perfect fit for the end of a streamlined and digitised digital gold supply chain. It was the perfect fit for what then happens with that gold – how it is represented and how it is used.

Keli Callaghan
And what would you call the Meld gold token: Would you call that a stable coin? Would you call it a digital asset? Like how do you sort of categorise that?

Michael Cotton
In the industry, precious metals have often been represented by what we called gold certificates or silver certificates. So for us, blockchain is just allowing that certificate ownership to be digitised and that’s in its simple form and more robust when you get all the incredible benefits of Algorand where it’s fungible, transactable and all the other great features of blockchain. Empowering a traditional style of ownership which, in their original forms was literally an embossed piece of paper, all the way through to now, we’re talking about something that’s incredibly powerful in the same version.

Keli Callaghan
Yes, and is there anybody else that’s sort of taking on the precious metals industry and modernising it, if you will, through blockchain other than yourselves? Is there anyone doing anything even similarly close to this?

Michael Cotton
Look, there are definitely plenty of gold products out there, some really great products and some people doing some really cool stuff. I think Meld’s core difference is:

  1. I like to talk about it like we are the gold industry adopting technology versus technology trying to adopt the gold industry. And so for us, where we’re different as a product is we are the entire gold industry adopting blockchain but we’re also bringing everything beyond just the digital certificate version so most products out there have just the ability to trade gold by blockchain. Our product has that component but it’s only a portion of what Meld is, in reality Meld in a huge way is the entire gold supply chain efficiently working together.
  2. The other really incredible benefit that comes with that, which I always get excited about as you can probably tell – I can talk for hours about it – is the idea that we get this decentralised capability for these assets to be held globally and to be redeemable globally.

So if you’ve got a gold retailer, who’s a participator in the Meld ecosystem in Portugal or the USA or New Zealand or Australia, you can go and deposit gold and digitise it. You can go and withdraw physical gold, and in reality our long term thinking is that the network will be what creates this alternative currency ecosystem of gold and bridges that sort of traditional ecosystem of investors with the digital space.

…we are the gold industry adopting technology versus technology trying to adopt the gold industry.

Keli Callaghan
So that’s a good question. You know, like Meld, how global do you envision Meld being? I know you all are based in Australia and we are very tied into the very large precious metal industry down there but sort of what’s the plan to start or expand or how global will it be out of the gate?

Michael Cotton
Yeah, so initially Australia definitely is our beachhead. We really see it as a fantastic way to robustly test the ecosystem. Because we are also really conscious that as much as we think we know a lot, we definitely don’t know everything. So we’re excited that within the industry we know really well, which is the Australian industry, we get the chance to really test the product, talk to the investors, talk to the users, and really understand what they want from the product; make sure we get that refined really well to exactly what we think is the best representation we can before we start to move internationally. And we’re definitely really keen to take the product global. And we’ve already got some really strong partners at a high level internationally within the gold industry including some of the largest gold traders in the world. And they are sort of the footing of our move internationally. I think where you’ll see us take those first steps is when you start to see retail partners offering redemption and depositing of gold and digital certificates being sold over the counter in those retailers. That’s when you’re really starting to see our push overseas but we’ll start those first initial steps in 2021.

Kelli Callaghan
That’s great, and then how did you arrive at using Algorand as sort of the backbone for this revamp of the precious metals industry?

Michael Cotton
I think a part of my problem is I get ideas of exactly how I think it should be and then you don’t always find technology to match how you think that should be solved or the problems you think you need to solve. And to be honest, Algorand surprised me. It’s one of those kinds of scenarios where you go, I hope it could do this… And when I discovered that Algorand could do things like atomic swap transactions and it could do all these incredible transaction speeds, low fees etc. The idea that we have the atomic transactions was really important to me. There’s a few really good reasons for that: Number one, I think eventually the future of a lot of transacting won’t be involving third parties. I think a lot of it will be peer-to-peer transactions via things like atomic transactions. But once we looked through there’s a whole heap of other incredible features of Algorand that make a huge amount of sense in terms of even that hybrid of traditional financial systems and the digital space and what Algorand actually does to allow it to be adopted on scale and still meet regulatory requirements in terms of the features you can enable. But on top of that, the team themselves – we met several members of the team and loved them – loved the work they’re doing. And I think that also made us realise that beyond loving the technology the fact we really loved the team and thought they were doing incredible work and liked the way that they operated and really had fantastic interactions with them whenever we met with them. It also gave us such a belief in the future of Algorand – we already were believing in the technology then to see there was such an amazing team behind it. It meant for us, this was the right company for us to work with and this was the right partnership moving forward.

…we already were believing in the technology then to see there was such an amazing team behind it. It meant for us, this was the right company for us to work with and this was the right partnership moving forward.

Kelli Callaghan
That’s great. Thanks Michael. You mentioned – just more out of curiosity – you mentioned the low cost. I can’t imagine low transaction fees being gatekeeping for something like gold, but will gold be transacting and more micro transactions because they’re like a —

Michael Cotton
Exactly, so I think that’s more of a future view of gold of what my vision is for the future. And I think a really interesting fact, which a lot of people are unaware of, is gold is the only currency – that is what I call it, commodity is what some others might call it – that is accepted as local currency at face value in every country of the world. It’s a really interesting thought process in the sense that it can transition borders without cost. And that’s a really amazing part and I think the idea that gold could become more of a currency is an inevitable reality, especially for the unbanked or countries that have financial systems that have struggled. I think this would be an incredible alternative to that system. And I think the more that we can build trust in that system and the lower cost and the fast transaction speed and the control of your own funds as well (you’re not trusting a third party), the idea that you can have your assets in your own wallet. I think all of that is really, really interesting. So like you say Keli maybe not now, but I think in the future to come it’ll play a much bigger part in that.

Kelli Callaghan
Yeah, that’s interesting. Great, and I know that you have a lot going on at Meld, but what’s next? Share with everyone, give us what you can.

Michael Cotton
Oh God, that’s an interesting question. (laughs) So I guess for us, for the next few months, first of November we officially go live in terms of it’ll be out there in the marketplace venues and that’s really via the partner network. That’s really exciting for us – that first sort of look out there. A part of that for us is getting those first initial partners working seamlessly. And that’s really that foundation of the Meld ecosystem functioning really smoothly. So January / February we’ll have our retail app coming out, which is where you can interact with Meld directly, and that’ll be really exciting. So you’d be able to trade in gold and silver and do that really easily. You can go redeem at local partner stores. You can do all that great functionality that I’ve talked about previously. The future for Meld though, in terms of where we head long-term, I think towards later next year [2021], we’d love to see the ability to earn interest on your gold and silver – have those kinds of capabilities that also the blockchain ecosystem allows for that just don’t exist in the traditional ecosystem. So we see really enhancing what people can do with their gold as a really important part. And then I think that’ll be a really amazing component to further the adoption of traditional gold investors to use something like Meld as a powerful tool for their current investing style.

Keli Callaghan
Yeah, that’s wonderful. In getting into the retail supply: how far away are we from me bringing an old piece of gold jewellery into a dealer here in the US and having it turned into Meld gold on my phone?

Michael Cotton
(sighing) Look, that is another very interesting question. I think if you were in Australia you could do it next month – which is really exciting – if you stay in the US, maybe let’s arguably say 12 to 24 months bracket is probably a sensible amount of time but–

Keli Callaghan
I gotta wait and make my way to Australia.

Michael Cotton
I would say fly to Australia – but I think at the moment it’s a more of difficult task than normal! (laughing) Hopefully, you’ll be able to fly here before we get to [fly] over there and you can come for holiday in Australia – it’s not a bad excuse to cash in some gold.

Keli Callaghan
That’s great, Michael, thank you so much for taking the time to sit down and just sort of give us a rundown of Meld, what’s coming next, what you’re doing and how you’re leveraging Algorand. I really appreciate you joining us and best of luck on all the stuff you’ve got coming up.

Michael Cotton
Thanks Keli, I really appreciate it. Thanks for calling.