Inspiration

India's obsession with gold is beyond being a symbol of wealth and status. Gold is a part of worship and popular tradition that goes back thousands of years. India is currently trying to curb black money and an analysis of illegal wealth uncovered by the income tax department shows that at best, only 6% of illegal wealth is stored in the form of black money rest of it is stored in several other forms. It seems only logical how frantically India is Googling for "How to convert black money into white" and the top searches include BUYING GOLD. A staggering 100 tons of gold were imported during the month that demonetisation was announced in India (November 2016), lending credence to the theory that there was a rush for converting black money to gold in the days post the note ban. Another big problem that is currently prevailing, is the Smuggling of Foreign market Gold in the country that may be used to fund terrorist activities or become a part of the Indian grey market. Another major problem that exists is with law enforcement agencies or insuring companies. These do not have a trusted database to refer. Whenever a Gold theft is attempted, the authorities have no tools other than pulling off a cumbersome investigation that may take weeks. The provenance of Gold and Gold jewellery is all paper-based currently. Dealing with Gold is risky with paper-based certification, as the chances of forgery through fraud documents increases. Also, there doesn’t exist a transparent system with complete records and provenance of all Gold in the market, this creates an atmosphere of ambivalence and conflict between industry partners.

What it does

AuQuest is building a solution of these problems using an immutable, transparent and fully traceable private Blockchain model. We need a way to keep track of all the transactions taking place in the supply chain from MMTC (Metals and Minerals Trading Corporation of India) to wholesale buyers to shopkeepers to certification houses & to the final customer. A private/permissioned blockchain would be ideal for this solution.
Using a permissioned blockchain like Hyperledger or Ethereum’s Quorum, the government would be able to see the transactions of each & every player in a single database & come to know of any wrongdoings being done by any player in the whole supply chain. Also since the blockchain is cryptographically secured, once a member of the supply chain uploads his transaction record, he can’t edit it in the future. This is essential for the Indian context as bribery is quite a common practice in India. In a blockchain less solution, one could alter the record by bribing the databases’ systems administrator.

Market Size

India’s gold market is very big. Gold is a major investment opportunity for almost every citizen including rural people to urban people. Officially India’s gold holdings are 557 tonnes which is the 10th Country With The Biggest Gold Reserves In The World. India’s private gold holdings(about 20,000 tonnes) are said to be worth approximately $600 billion. According to WGC estimates, of the country’s total gold consumption, about 12-15 percent (about 100-140 tonnes) has been unofficial. If we assume this is the quantum of gold that is sold to people in the black market, then the black money used for buying gold in India is Rs300 billion. We expect that through our solutions we can put back this money back in the Indian system which has many economic and social values.

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