Liberty Dollar becomes silver-backed cryptocurrency
- Published: Jun 19, 2018, 9 AM
The Liberty Dollar is being resurrected as an asset-backed cryptocurrency that, according to its developers, "facilitates vaulted, physical ownership of precious metals and the real-time trading of physical precious metals."
The cryptocurrency, identified as LD2, is the brainchild of Extra von NotHaus (son of Liberty Dollar creator Bernard von NotHaus) and Steven Brendtro.
The cryptocurrency will first appear with silver assets, with a future issuance to include gold assets.
According to the developers, the LD2 cryptocurrency is "a blockchain-based digital warehouse receipt, issued by [ISSUER], with the precious metals backing on deposit with the [DEPOSITORY], and the [AUDITOR] providing a monthly examination of all holdings. The [AUDITOR] works on behalf of the token holders to verify that all issued tokens are backed by the prescribed amount of precious metals. This third-party vaulting verification and independent auditing ensures that there is exactly one troy ounce of physical precious metal in the vault for each token issued, at all times —– independent of token ownership. As a digital warehouse receipt, every LD2 token is fully redeemable through the [DEPOSITORY] for its precious metals backing."
According to Extra von NotHaus, "the first two issuances, LD2.zero and LD.silver, will be backed by silver before we issue a gold-backed version."
The Liberty Dollar currency was first issued Oct. 1, 1998, by creator Bernard von NotHaus through his National Organization for the Repeal of the Federal Reserve (NORFED). NORFED subsequently re-branded itself as Liberty Services. On Feb. 10, 2003, the physical Liberty Dollar currency expanded into a digital currency, “eLD,” which functioned until Liberty Services suspended operations in 2009. According to the LD2.zero developers’ website, every Liberty Dollar issued, whether digital or physical, was, at any time, 100 percent backed by and 100 percent redeemable for the underlying precious metal.
The original Liberty Dollars were promoted by the issuer to be used in commercial transactions as an alternative to federal currency, including Federal Reserve notes. Liberty Dollars eventually drew the attention of federal authorities, who filed criminal counterfeiting charges against Bernard von NotHaus.
Bernard von Nothaus was sentenced Dec. 2, 2014, to three years probation following his March 9, 2011, conviction for “making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States.” Bernard von NotHaus faced up to 22 years in prison, the maximum sought by federal prosecutors.
"LD2 digital tokens are a warehouse receipt that guarantees its owner/bearer the precious metal stored in the insured vault," according to the LD2 founders. "With the initial issue of LD2.zero, each [digital] token is backed by one troy ounce of .999 fine silver. Since LD2 tokens represent silver on deposit at a vault, there is an inherent price floor to the token price. The LD2 issuance process is designed to ensure that the precious metals backing the token are in the vault and examined before any LD2 token is ever issued and sold."
First, the issuer purchases the silver that is delivered to the depository, where the depository and auditor verify the deposit. The issuer issues tokens, with the tokens sold or reserved. Tokens are transferred to the holder that purchases them, and then circulate.
Should a token holder wish to redeem the token, the holder initiates the redemption process, the 1-ounce silver rounds are withdrawn from the depository for shipping, and the digital tokens destroyed.
The 1-ounce silver pieces will be struck in Rochester, New York, by North American Mint.
Extra von NotHaus told Coin World June 19 that the 10,000 silver pieces to be struck for the initial offering will bear the designs that Bernard von NotHaus had created for the 20th anniversary of the Liberty Dollar in October 2018. Extra von Nothaus said the first 1,000 of the 10,000 20th anniversary silver pieces being struck are reserved for the firm to help finance expenses.
Bernard von NotHaus will be striking 1,000 additional silver pieces, beyond the LD2.zero 10,000 strikes, specifically for the 20th anniversary silver pieces. Those 1,000 pieces will be specially countermarked with an as-yet-unannounced marking, to differentiate them from the LD2.zero pieces. Once the available LD2.zero silver pieces are sold, silver pieces with a completely new set of designs, currently under development, will be offered, Extra von NotHaus said.
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