What are the risks, and how does Goldsand reduce them?
Risk and reward go together. Goldsand is designed to reduce risk while preserving the opportunity to earn real profit.
Risk and reward go together
Ethical finance follows a simple principle: without risk, there is no reward. When you use Goldsand, you share in the real profits generated by transaction activity. You also share in the risk.
Goldsand’s job is to reduce that risk as much as possible while preserving the opportunity for profit. Having stringent requirements for assets Goldsand interacts with, secure infrastructure, independent custody, and continuous monitoring among other controls, all help reduce risk.
A useful mental model
Risk is a spectrum
This is a comparison, not a guarantee. Goldsand carries more risk than an insured bank deposit and is designed to be less volatile than owning stocks directly.
Risks Goldsand Avoids
There is no price volatility risk like there is with stocks and other volatile assets. Goldsand does not hold volatile assets or depend on their prices rising.
Goldsand also does not lend your funds to borrowers. Your rewards come from processing approved stablecoin payments (What’s a stablecoin?), not from interest or speculation. See where the returns come from.
Risks Goldsand Mitigates
1. No FDIC insurance
Goldsand is not FDIC insured, and nobody can guarantee 100%. Like any digital financial service, Goldsand depends on technology and security systems that can fail or be attacked. In exceptional scenarios, those failures could result in lost funds.
2. Stablecoin reserve risk(What’s a stablecoin?)
Before 1971, the dollar’s international value was tied to gold. Over time, the dollars held abroad exceeded the gold reserves available to support them. That put the promise of fixed conversion under pressure and led the United States to end convertibility into gold. Read the Federal Reserve’s history of the Bretton Woods system.
Stablecoins rely on a similar principle. Assets are held in reserve to support their value. If those reserves shrink, lose value, or become inaccessible, that can threaten the value of the stablecoin.
The shared idea
Stablecoins are backed by reserves
Dollars held abroad
Gold reserves
The dollar used to be backed by gold reserves.
Stablecoins in circulation
Dollar reserves
Stablecoins are backed by reserves that support their $1 value.
In both systems, confidence depends on the assets behind what circulates. Reserve risk appears if those assets fall short, lose value, or cannot be accessed.
3. Little or no profit
Rewards depend on real transaction activity. If transaction volume or fees fall, rewards can fall too. They may be lower than expected or remain at zero for a period.
How Goldsand reduces risk
Funds held separately
Funds are not held on Goldsand’s balance sheet. They are held with audited third parties, so even if Goldsand disappeared, users could still withdraw.
24/7 monitoring
We monitor reserve assets and other risks around the clock, and take action at the slightest sign that something may be wrong.
Proven stablecoins
We only use established stablecoins from regulated providers. Each has a strong reputation, a long track record, and has always recovered if they ever fell below $1.
Secure, audited infrastructure
Independent security audits review the smart contracts that hold funds and identify known classes of vulnerabilities.
A proven track record
The infrastructure underlying Goldsand has handled more than $20 million over more than two years with zero losses so far.
Goldsand is not FDIC insured, and no system can provide a 100% guarantee. These safeguards are designed to reduce risk while keeping your funds outside Goldsand’s balance sheet and under your control.
