Bitcoin Forum

http://answers.yahoo.com/question/index?qid=20080827115251AAYDgdW
Q: What world currencies are actually backed by gold?
A: None

Im no economist, but what would it take for bitcoins to be "backed by gold"?

Possible, Plausible or Impossible?
I see two possibilities either a wealthy person puts up some gold to back the whole currency, or a bitcoin wallet provider purchases gold and its customers wallets are backed by the gold standard.


P.S. I have no gold. Just thinking out loud.

You can just exchange gold and bitcoins at whatever rate you specify.

I think theirs a difference between "backed by gold" and exchangeable for gold.

But that's what governments did. They specified exchange rates and expected people to believe that they held as much gold as the currency in circulation represented.

Although almost every if not every central bank has some gold reserves but not one fiat currency on the whole planet is backed by gold anymore. The last was the Swiss Franc which was backed 40% by gold up until 2000 where they had a referendum and the people voted to go off of it.

So what we have now is a global monetary system of monopoly money backed up by mostly what countries produce and how powerful of an army they have while all the population is getting robbed left and right through artificial low interest rates.

You are asking the wrong question. Gold didn't back money, gold was the money. And when people started to warehouse it in bank vaults they got receipt which they started trading as if it was gold itself. Later governments through laws and enforcement through force established a monopoly on these paper receipts, gave them names and proclaimed how much weight is represented with a certain number. For instance in the beginning of the 19th century $20 was redeemable for 1oz of gold.

So the phrase "backed by gold" was miss-used ever since the governments grabbed the monopoly on money. The last country where this happened was the USA in 1913 when the FED was created. Before the FED dollars were basically although government issued receipts for gold. But with the FED it soon changed to legal tender which it is today.


Basically the important point to take away from post is that gold is money. And that paper money was just suppose to have made it's trade easier. So when you're looking at BitCoins you cannot have it "backed by gold" because they are two different commodities and the most that you can have is open free trade between the two. Eventually I suspect will get to a very stable and constant price of gold in BitCoins and vice versa.

You need a warehouse with 21 million units of gold.  You pick the units.  You then say you will redeem 1 BTC for each unit.  You need to somehow be bound at this rate.  Now it's backed by gold.

It would be silly of you to do this.  If 1 BTC ever was worth less than the gold, you'd be the proud owner of a ton of bitcoins and be out a lot of gold.  If it became more, people would bring you gold and want bitcoins.

Pegging one currency to the other always results in one hoarding the more valueable one and redeeming it for the less valued one.

Actually it is, but it is developing now, the new currency namel Gold, russian company GoldMint is going to release it in Q2 2018, check their white paper if interested it that kind of investments.

Sell Bitcoin and buy Gold to be on the safe side. All the reputed gold and silver dealers sell for "cash money".

"backed" means that if you have (1 unit of currency) be it one dollar, euro, or pound I can exchange it for 1 oz of gold .. now, later or after 10 years and still get that 1 oz or 1 gram of gold.

no currency as far as I know promises that it would pay the equivalent of gold in the future, instead you get the current market price for GBP/GOLD or EUR/GOLD  for a currency to be backed by gold it would be EUR=GOLD

Bitcoin can't be backed up by gold, it was not created to be this way. I mean if we look at what tether (USDT) is doing by pegging their coin to real USD value and there are a lot of talks that they create more coins than they actually have in reserve. So imagine if you had gold backed up crypto, it could easily end up like tether and thus we can easily see similarities with fiat currencies. Fiat was backed up by gold way back and then slowly through time it wasn't and today governments can print as much as they want. So it will be really hard to create a system for crypto to be backed up by gold as it will need a lot of trust. Plus you will have to have reserve of gold somewhere and pay for somebody to safeguard it etc.

For bitcoin to be backed by gold, this has to be accepted: total bitcoin supply = total gold supply

171,300,000 KG of gold = 21,000,000 BTC

which will equal almost (8 KG) per (1 Bitcoin)

and to really back it by gold, governments will have accept the exchange of bitcoin for their gold reserves.

It is not a good idea to peg bitcoins to anything. A dollar peg is when a country maintains its currency's value at a fixed

exchange rate to the U.S. dollar. The country's central bank controls the value of its currency so that it rises and falls along

with the dollar. Most of the Gold in the world are protected by Banks and governments. {So we would be giving up power to

whomever is controlling the Gold value}  ;)

Have you heard of gold-backed cryptos? Here's an interesting ICO that I found.

Kinesis is a yield-bearing digital currency based on 1:1 allocated physical gold and silver. The vision for Kinesis is to deliver an evolutionary step beyond any monetary and banking system available today. It is a globally accessible, usable and reliable digital currency forming the basis of a new Monetary System.

Is this the future of money? Find out more on their website. https://kinesis.money/#/

In the early stages the currency notes were printed based on how much gold they are having in their country but now a days most of the banks printing their money on their needs that is the reason whey we face inflations so now the world currencies were not backed up by gold.Bitcoin is the one think which can save ourselves from the inflations.

nor what. The gold standard for maintaining gold money was abolished in 1952 (if I'm not confused) at the Bretton woods conference.

The gold standard disappeared in fiat money. It probably will not be created for crypto currency, unless somebody decides to issue a crypto currency backed by the actual availability of gold in the bank for some kind of stable coin.

I do not think that there are any currencies in the world now that are backed by gold.Most of the countries have taken their currencies out of the gold standard and make it fiat money which are issued by the governments that is why most nations are in debts now and struggling to deal with them.

Now there are several "golden" crypto projects. Personally, I am impressed by the OneGram project from Dubai, which plans to raise $ 500 million to ICO. For today, 22% of 12,400,786 tokens sold at $ 43.18 apiece are sold. "Dubai" and "gold" sounds somehow impressive, you must agree. OneGram is tied to the stored physical gold. They have a rather strange thing in my opinion: they position themselves as a project for Muslims.

You can't backup bitcoin with gold because that will stuck the price and bitcoin would lose that volatility, and gold standard doesn't work at all, we already see it fail once, why should we adopt that model if we realized it doesn't work. That would be non sense.

What we can do is to have a QR code on a gold coin, in that QR have a private key with an addy with 1btc, that would be fun, the double value coin  ;)

It is plausible but impossible in practice

Theoretically, you could back up a cryptocurrency with physical gold, and I know that some coins are in fact claiming just that (though I don't know how true their claims are). It is definitely not possible to back up Bitcoin with gold since there is no single entity which controls it. Otherwise, you would just be selling gold for bitcoins and vice versa at a certain price, fixed of floating, as this is what your idea (actually, two ideas) comes down to. Needless to say that it would have little to do with real backup by gold or any other hard asset. You should have complete control over the token which you are going to redeem for gold, including the clause where you have the right to revoke certain tokens or declare them illegal at your own discretion

It will never happen again. Governments don't want to empower the average citizen with hard money, they just want to have the control of the monetary supply at all costs and control all parameters. Hard money doesn't allow them to modify the total supply and other variables, the most obvious being the amount in circulation. I think it's just delusional to expect the gold pattern to happen again. The bst we have now is bitcoin, but goldbugs think that some day we will go back to trading actual gold for goods and services instead of bitcoin. The question obviously being why the hell would you do that unless you are ok with not taking advantage of a global market and you stay within your local niche community which happens to accept gold for some reasons.

So dump your gold an fiat and buy bitcoin seems like the most sane thing to do at this point.

there is no indeed, but when we look at the gold exchange rate, surely the first thing that emerges is the exchange rate of gold to the dollar. Is the dollar backed by gold? not really. it happens because some countries also use the dollar as a benchmark for the value of their currency.

It is technically impossible because Bitcoin doesn't belong to anyone, i.e. no one has complete control over it. If you have plenty of gold and many thousands of bitcoins, you can do something to that tune and set an arbitrary exchange rate. But if this exchange rate doesn't follow the market prices, people will quickly buy up either gold or bitcoins from you depending on the discrepancy between your and market prices. If you keep your exchange rate floating, then the whole idea of backing up Bitcoin with gold will be pointless


If I remember correctly, there were gold bitcoins as you describe them (QR codes and all) but you had to pay a premium for them which equaled or even exceeded the price of gold in these coins

No need to back bitcoin with gold, Would you even consider to back whatever amount of gold you have with yet any other amount of gold? World currencies have to be backed by gold because if for example a country prints more money than they have gold to back, You could simply disrupt their economy by getting their money and buy their gold with it.
Every country has gold, They have to report it to the world bank, Otherwise they won't be able to print any money.

How's that really?

Every country prints way more money than it has gold. There are about 7T dollar worth of gold in the whole world as of now, while the size of the US national debt alone is 3 times greater than that amount. Some countries don't even have gold reserves at all or their gold is in someone else's hands (e.g. Germany). And so what? Can you explain how buying up all gold in a country can ever disrupt its economy? Any economy today is based on real production, not on a shiny metal, whereas gold itself is pretty irrelevant in the grand scheme of things as its uses are rather limited, and in no case its shortage can threaten a more or less developed economy

It's an interesting idea, but i don't think it works this way. It's not possible to back bitcoin by gold as it's decentralized currency without emitter, that's why no one can back bitcoin with gold following the gold standard

I'm sure that none of this will happen and yes it is not necessary that bitcoin be backed up with gold because he himself is digital gold ;)