The Pot of Gold at the End of the Rainbow
When I was a child and my mother would espy a rainbow, she was almost sure to comment on how there was a pot of gold at its end. The “pot of gold at the end of the rainbow” is a commonplace fancy and an exceptionally charming piece of folklore.
Where did this fanciful story come from? And might it have any significance to our investment strategy?
The pot of gold at rainbow’s end is inextricably linked to the leprechauns, and reliable information about their folkloric roots is as elusive and maddening as are leprechauns themselves. Irish Central cites the two historians of folklore and European paganism I have consistently found most reliable, the Matthews:
According to the book "The Element Encyclopedia of Magical Creatures," by John and Caitlin Matthews, the leprechaun legend can be traced back to eighth-century tales of water spirits called "luchorpán," meaning small body. The legend eventually evolved into a mischievous household fairy said to haunt cellars and drink heavily.
Alicia McDermott, writing at Ancient Origins, another reasonably rigorous journal, writes:
Leprechauns are thought to have been one of the many types of inhabitants of the fairy forts or fairy rings in ancient Ireland. It has been suggested that the merry tricksters of today may even be a modern incarnation of the Euro-Celtic god Lugh (pronounced “Luck”). Lugh was said to be the sun god, patron of arts and crafts and leader of the Tuatha Dé Danann ("peoples of the goddess Danu").
Leprechauns are now understood to be the fairy tales of the past and fanciful stories to tell when one sees a rainbow.
So where do the rainbows come in?
First, Science.howstuffworks.com teaches us that:
Once upon a time, the Vikings lived in Ireland, looting and plundering as they pleased, then burying their ill-gotten treasures all over the countryside. When they eventually departed from the Emerald Isle, they inadvertently left behind some of their booty, which the leprechauns found. Now, the leprechauns knew the Vikings had gotten their treasures through stealing, which was wrong. This bad behavior made the leprechauns mistrust all people, Viking or not. In order to ensure no humans could take what they now considered their gold, the leprechauns reburied it in pots deep underground all over the island. When rainbows appear, they always end at a spot where some leprechaun's pot of gold is buried. (Emphasis supplied.)
The trope of a pot of gold at the end of the rainbow was updated into a mystical science fiction novella by the late, great, Fred Pohl in The Gold At Starbow’s End:
[The astronauts on a first interstellar mission] turn to the I Ching and the Tarot and various exotic philosophies for comfort. They practice tantric sex. They start families. One of them dies and is somehow brought back to life. They invent a faster than light drive, but refuse to share the secret because it would be irresponsible. And it is now that the astronauts have turned into space-faring hippies that the President quickly passes blame for the mission onto Knefhausen, who laments the conspiracy of hippies above and hippies below.
So much for the wonderfully imaginal association between rainbows and pots of gold.
As for your investment strategy, how do we get our hands on the gold? I’m afraid to tell you that you will have to do it the old-fashioned way. By buying it, unless of course you happen to work in the gold mining industry. It turns out that rainbows do not actually have ends.
Science.howstuffworks.com also dispels 10 Myths About Rainbows.
It's true rainbows appear to form perfectly rounded arches. But in reality, rainbows form full circles. Then why don't we see circles? When we're standing on the ground, we can only see light that's reflected by raindrops above the horizon. Thus, we can't see a rainbow's lower, hidden half. There is one way you may be able to see a full-circle rainbow, though. If you're a pilot or passenger in an airplane or helicopter – and thus can see below the horizon – you might see a rainbow as a full circle. Sometimes people climbing tall mountains can view circular rainbows as well [sources: Lewin, National Geographic].
Since a rainbow is a circle you'll never reach the end or the bottom. Rainbows seem to move when you do, because the light that forms the bow is always at a specific distance and angle from you [source: Howard]. Remember we said earlier that rainbows were optical illusions? That's why you'll never find your pot of gold, alas.
Since rainbows, being circular, have no end – and leprechauns can only be found in folklore (or Ireland, but I repeat myself) -- we must then turn to legitimate means to gain our gold.
Perhaps, however, consider the rainbow a poetic foreshadowing of the blockchain, the vehicle by which Responsible Gold™ records your ownership of grams (or tonnes!) of pure gold held securely for you in a high-security Swiss vault. The blockchain provides you with an immutable token by which you acquire and transfer your real, pure, responsible gold.
While the blockchain is, like a rainbow, immaterial (digital rather than analog) there is nothing fanciful or evanescent about it. It is as real as the words you are reading right now but backed up innumerable times on many computers to prevent loss!
The gold you own as ticketed on the blockchain is completely physical. Elemental, my dear Watson! It is made up of atoms, with, as it happens, a relative atomic mass of 196.967. As real as real can be, and securely vaulted in a Swiss high security facility.
The blockchain, while digital in nature, is also real. Per Brookings Institution:
The Blockchain enables the anonymous exchange of digital assets, such as bitcoin, but it is not technically dependent on bitcoin. The elegance of the Blockchain is that it obviates the need for a central authority to verify trust and the transfer of value. It transfers power and control from large entities to the many, enabling safe, fast, cheaper transactions despite the fact that we may not know the entities we are dealing with.
The mechanics of the Blockchain are novel and highly disruptive. As people transact in a Blockchain ecosystem, a public record of all transactions is automatically created. Computers verify each transaction with sophisticated algorithms to confirm the transfer of value and create a historical ledger of all activity. The computers that form the network that are processing the transactions are located throughout the world and importantly are not owned or controlled by any single entity. The process is real-time, and much more secure than relying on a central authority to verify a transaction.
The qualities of the blockchain are unique and invaluable. As Marc Andreessen, billionaire venture capitalist and inventor of the first Web Browser, told The Washington Post (WP questions in boldface) in 2014:
I have a lot of friends who are programmers. The programmers have always gone like, "Those [Bitcoin] guys are crazy."
And then, almost 100 percent of the time, they sit down, read the paper, read the code — it takes them a couple weeks -- and they come out the other side. And they're like: "Oh my god, this is it. This is the big breakthrough. This is the thing we've been waiting for. He solved all the problems. Whoever he is should get the Nobel prize -- he's a genius. This is the thing! This is the distributed trust network that the Internet always needed and never had."
So the business opportunity posed by this "distributed trust network" — as an investor, what do you see that you could potentially —
Hundreds or thousands of applications and companies that could get built on top.
Is this, like, a billions-of-dollars kind of industry?
Yeah! (Laughs, steeples his fingers Mr. Burns-style). Yeeeah… (Laughs)
So, with Responsible Gold™ -- one of those applications “that could get built on top” to which Andreessen referred -- you have a hybrid of the oldest recognized form of value in the world, gold, with the newest, the blockchain.
Putting these two together forms, metaphorically speaking, an alloy where you can enjoy the relative stability of the purchasing power of gold with the efficiency, economy, and security of that amazing high tech breakthrough, the blockchain.
Welcome, in a whole new sense, to the pot of gold at the end of the rainbow. Welcome to Responsible Gold™.