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Bridge to the Digital Future: Goldmint Company Presents its New Custody Bot

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by Maria Konash · 7 min read
Bridge to the Digital Future: Goldmint Company Presents its New Custody Bot
Photo: Goldmint / Medium

A curious device, which can become one of the first interlinks between our everyday reality and the digital future, has been released recently. Goldmint Company operating since 2017 has demonstrated the long-awaited Custody Bot.

The model “Goldmint – Вlockchain for pawnshops” provides the transfer of pawnshops’ transactions to the Mint blockchain network in a hashed form. This allows pawnshops to solve the problem of their operations opacity and attract cheap funding. What is it necessary for?

Pawnshop industry has never been reformed and has existed virtually unchanged since its inception. Loans secured by gold, despite their reliability, are very expensive for the borrower. The average loan rate is about 100% per annum in Russia, and a little less in developed countries. The average loan rate in the EU is 0.5–0.8% per day.

Operational activity of a pawnshop is quite expensive due to the cost of the premises and the salary of a qualified appraiser. Loans that are not secured by liquid collateral, such as gold, have a significant proportion of defaults both in Russia and abroad. As a result, pawnshops have a not very good reputation among the middle class around the world. Some people, who seeking to sell unwanted gold items avoid going to pawnshops.

At the same time, a percent of unredeemed pledges in Russia is not more than 10%. In case of no ransom, the pawnshop simply sells the pledge to the precious metals refinery. Moreover, the cost discount included in the pledges and the rather smooth dynamics of gold prices do not allow the pawnshop to incur losses. The percentage of non-repayment in the EU is about 6%.

Thus, the main risks for the pawnshop are as follows:

  • appraiser’s mistakes when accepting the product;
  • theft of pawnshop items;
  • employee fraud.

Custody Bot almost completely eliminates these risks.

Custody Bot is a unique machine that serves as an oracle in the Mint blockchain. The blockchain itself ensures the immutability of information. Nevertheless, it does not solve the problem of its authenticity. However, this problem is solved by creation of Oracles.

In other words, the web services that collect information from several independent sources, summarize it and place it in smart contracts of the blockchain. But the trouble is that this information is primarily published in independent sources by people.

In order to put Custody Bot in operation, you only need access to the 220V power supply network and the TCP/IP protocol for access to the Internet. Physically, the Custody Bot occupies only an area of about 1m2, which allows it to be installed practically in any place where it is possible to connect it to the power grid and to the Internet.

Product composition assessment is made by modern non-destructive method, allowing reliable determination of the quantitative composition of materials. Precise estimation of the product’s material composition makes it is possible to determine the purity of the jewelry item with guarantee and designate it to the appropriate category.

Spectral analysis of the product is performed for this purpose. According to results of spectral analysis, a decision is made about the advisability of further checks and, in the event of a negative result, the product is returned to the client.

Also, in order to exclude counterfeit and non-integral jewelry, the system should provide additional verification of the authenticity and integrity of the jewelry. Hydrostatic weighing method is the simplest and at the same time the most reliable method of such verification.

This method is based on counteracting the mass of the displaced fluid and the volume of the product. The method involves two weighings of the product. The first weighing gives a clean, so-called “dry” weight of the product, the result of which is entered into the estimate as the weight of the product.

The second weighing of the product immersed in liquid allows to determine the volume of the product. The results obtained by the two weighings are then compared with reference values and these indicators are used in an automated calculation allowing the system to make a conclusion about the value of the product.

The process of determining purity of the product is carried out in several ways: spectrometry, mass measurement of the product immersed in water and mass measurement by water displacement. Each of the measurements has its own advantages and disadvantages, but together they represent a universal algorithm for evaluation.

The following devices are used for this purpose:

  • spectrometer (measures the qualitative composition of the product and guarantees an error of no more than 0.1% as well as compliance with European and American standards);
  • Td series precision hydrostatic scales.

AIRA project technologies are used as a protocol for working with the network.

These technologies are aimed to provide automating interaction with the blockchain, followed by automating the movement of the product inside the Custody Bot performed by intelligent manipulators at the next development stages.

The approximate algorithm of the robot’s operation is as follows: preliminary self-diagnostics of the device, the receiving chamber opening, placement of the product in the receiving chamber by the operator via the receiving tray followed by the access blocking. Video recording should be performed at this stage.

Then, the product is moved inside by unique mechanisms in order to pass all the necessary evaluation phases. All the results are recorded after each measurement. On the next step, the product is placed on the carriage moving the storage device. The product is then placed in a storage cell and the video recording is performed again. If it is necessary to release the product, the storage cell is brought to the tray, the flap opens and the product can be collected.

All steps described above is a unique technological process, the creation and development of which took an incredible amount of time, money and effort. Further, the robot connects to the Mint blockchain in order to transfer information on transactions. The robot evaluates the product and then it can offer a certain amount in GOLD tokens for it.

A significant breakthrough in the solution proposed by Goldmint is the ability to expand the geography of loans secured by gold.

Credit institutions such as international financial organizations and banks issuing loans to individuals would like to be able to grant these loans on the security of gold; however, they can’t do this since Lombard business requires:

  • specialized licenses;
  • hiring a professional appraiser;
  • installation of safe and compliance with certain requirements for the room.

From the point of view of the bank or international financial organization, Custody Bot provides the possibility of additional income as follows: each of these organizations has a significant flow of borrowers, the credit risks for which are assessed as too high. The share of such borrowers can reach up to 95%.

Some of these people keeping gold at home, however for various reasons they do not want to take loans from the pawnshop. By use of Custody Bot, Banks and international financial organizations offering more favorable conditions than a pawnshop, will receive additional income from this source.

Goldmint assumes the licensing of Custody Bot in the Assay Office, thereby eliminating credit organizations from the need to obtain pawnshop licenses.

Custody Bot allows you to issue loans and buy gold products not only in pawnshop locations. For example, it can be installed in the network of international financial organizations, banks, and later in supermarket chains, at gas stations and transportation hubs, that is, everywhere where there are large flows of people.

The advantage of the solution is also the small size of the device as well as its complete autonomy.

Thus, the work of this unit eliminates the human factor in the assessment, reduces costs and provides transparency for the work of pawnshops, which is essential and act as a welcome step for reforming and updating the industry.

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