Bitcoin Forum

I don't think Bitcoin and gold need to compete with one another, that for Bitcoin to rise gold has to collapse. I think both of them need to be on parity of each other, in this case Bitcoin to be on parity with gold. Bitcoin and gold share very much the same fundamentals, both are a store of value of deflationary nature against the inflationary fiat.

Actually gold really isn't worth as much as it is now but it really doesn't matter, people just want something that does not lose value to back against fiat. Bitcoin is the digital equivalent of gold. Just like how money evolve to being digital, mere numbers on a computerized banking system, gold too will be digitized. An that digitized gold is Bitcoin.

So why not peg Bitcoin to gold? Of course Bitcoin being a decentralized and a non-authoritative system no one can force Bitcoin to be pegged to anything but only the people who use bitcoins themselves. Can there be any other way that Bitcoin be priced at some specific value other than being dictated by the free market, that is the exchanges, which are prone to manipulation?

I suspect if you find a way of pegging an asset to another, unrelated asset without invoking authority, you'll be in the running for the Sverige Riksbank Prize in Economic Sciences.

¹ Bitcoin for the traces in your CPU? Makes perfect sense

² Go ahead and put your asks around $1200 and you can make the difference. You will have effectively pegged Bitcoin to gold

You can't peg bitcoin to gold.
You can peg fiat to gold.

bitcoin has value due to scarcity like gold.
fiat like USD is an IOY which used to represent gold by being backed by gold. Now fiat is backed by a promise and the general consensus that it is worth something.

Oww wouldn't it be nice if people would think about their silly ideas for more than a second before they decide to post?
The internet would be such a quiet peaceful place.

BitsharesX is doing exactly what you describe with market pegged assets that resemble the value of FIAT and commodities in a decentralized manner.

based on rarity there are only: 175,000,000,000 grams of gold on earth (175k tonnes gold)
based on rarity there are only: 2,100,000,000,000,000 satoshi's of bitcoin on earth (2100 trillion sats)

making 1 gram of gold worth 12000 satoshi
or
making 1 ounce of gold worth 340194 satoshi

so there is your 'peg': 0.00012000btc = 1 gram of gold
or
so there is your 'peg': 0.00340194btc = 1 ounce of gold

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6,173,000,000 ounces of gold in the world
so there is your 'peg': 1btc = 293.95 ounces

---

and for fiat lovers 1ounce=$1215
so there is your 'peg':1btc = $357152.14 based on a gold peg standard

The only way the price of one thing (bitcoin, for example) can be pegged to another thing (gold, for example) is to have someone that can and will trade an unlimited amount at the pegged price. Just saying the price is pegged isn't enough.

Thank you franky1 for making the effort to do the maths.  Indeed bitcoins are severely undervalued at the moment.

Again, we run into the $1million per Bitcoin in about 10 years idea. 

I hope there is something to it because I will retire at the point that looks likely.

I've always dreamt about digital currencies ever since I realized that each and every aspect of our lives will eventually become digital.  But knowing digital, everything in binaries can be an exact lossless copy, I started to wonder how can currencies be digital, where exact same copies can be made. Along came Bitcoin.  And the fact that Bitcoin was concepted to be limited, that totally changes the way we think about currencies. If you know, that that one dollar you spend will become so much more in the future, will you spend it? See, we've become so used to spending inflationary currencies, that the dollar we have now is going to worth less in the future so we spend it, how about the dollar that will increase its value in the future? Bitcoin is exactly that, a currency that can only increase in value in the future. It's deflationary. We'll see.

im already semi-retired due to bitcoins :D but thats another story.
if you like maths then you will like that its estimated that the wealth of the planet averages to about $40k per working age man (5billion)
yea i know corporations and richguys own billions while some people only have approx $10 to their name, but it averages out as $40k

this means that the total average savings of working age people in the world is 200 trillion
(yea i know what your thinking already)

so if we devided it down so that bitcoin was distributed fairly and became the only currency 1btc = equivelant to $9.5million
or
working it out as the bases of an average man who would have had $40k in his life savings. he would get to hoard 0.00421056btc as he had to share it with the other 5billion.

so if you only had $4k in your bank you'd only own 0.00042105btc.
or put simply if every currency of the world only used bitcoin then:
$1 converts to 10sat,
£1 converts to 16sat,
¥10 converts to 16 sat
€1 converts to 13sat,

that being said. both of my posts infer that bitcoin TOTALLY replaces all currencies, and i do not believe in that utopia. so my numbers are meaningless and just for theory..

i beleive that not 5billion will throw their life savings at bitcoin. but maybe 21 million people would (average population of a large capital/city such as london or new york) making bitcoin about $40k each. again a meaningless theory

Wealth =/= savings. Saying that the average person has $40k of wealth is not the same as saying the average person has $40k in savings. Wealth = assets + savings. It is wrong to divide the total wealth in the world by the number of bitcoins and use that to derive a potential value of a bitcoin.

I think this is what you are trying to do:

The monetary base of the world is about $12 trillion (or something like that), so if all the currencies in the world were converted to Bitcoin, then 1 bitcoin would be worth $923,000 ($12 trillion /  BTC13 million).

So you've obviously put everything you can into buying Bitcoins.


No? Why, if it can only increase in value? Could it be value deflation isn't assured, after all? So maybe it makes sense to spend BTC when you want to buy something?

I agree. There is no guarantee that the value a bitcoin will always increase. Even though supply is constant or falling, the value could fall if demand fails.

I think it would depend on how you define "deflation" to be able to say if bitcoin is really deflationary. If you were to measure it by the value of goods and services that one bitcoin can purchase then in the past it has been, however in the future ??? who knows. If you were to measure deflation by the total money supply available then no bitcoin is inflationary because additional bitcoin go into circulation every 10 minutes that were not previously in circulation

Only what I can afford to(be realistic). But I'm one of those hodlers who would hold for 10-20 years. To me it's of no question whether the price will rise or not. I'm only concerned of getting as much btc as I can while I can afford to.

um... nope
$12trillion.. is just USA
WORLD monetary base which if converted to a comparable dollar value = $200trillion
also i was not trying to be too specific. i was showing the Utopian fallacy/dream theory of the future (when all coins are mined) hence the 21mill coin, not 13mill coin.

i could have gone into specifics such as known lost bitcoins and current circulation.. but then id be forever updating the post every day as the numbers would change.

i just wanted to make 3 easy to calculate and double check calculations just to show the utopian potential

2 years ago i had that same mindset. id only invest what i considered disposable amounts. (basically what i would have wasted on a weekend alcohol and fast food night out with the lads) that way you dont miss it, as it would have only ended up in the toilet the next morning anyways. and you are less emotional to sheeple panic at every bit of news.

since then i have hoarded a large amount and dont really care about the exchange rate

This is a pipe dream...

I feel it's important to mention that nation-state fiat is not just backed by a promise, but it's backed by a promise of legitimized violence.

That's the only reason it has continued to exist as long as it has (which is really not very long at all in historical terms, less than 100 years).

In theory, this would be possible. You would have to have some amount of gold that backs each bitcoin. You would need to trust some central authority to hold an amount of gold that corresponds to each bitcoin and exchange it upon demand.......actually when thinking about it a little bit I don't think it is possible. You would have to deal with the issue of having a central authority (which defeats the point of bitcoin in the first place) that would control the assets that backs bitcoin, and would have to deal with the issue of mining; who would pay the miners for each block that is mined?

I don't think it is viable. Bitcoin is digital intangible, decentral asset. Gold is tangible asset. They have contradicted concept. The gold holders will be unhappy to peg gold to virtual things. They scare gold's value will be drawn down. Bitcoin holders may be happy to see the price skyrocket and could profit a lot. But the technology fans will not be satisfied. The independent of bitcoin will be impacted.

It is not a potential solution but you have the reasons incorrect. Ecuador is going to have their digital currency (intangible asset) backed by some other asset (likely a tangible asset). In order for this to be a possibility, someone with a lot of gold would need to essentially use that gold to back bitcoin. You would also need someone to be very charitable to give the miners ~$12,000 worth of gold every time that a new block is found.

bitcoin (at this time) can not compete with Gold, Gold has a demand more than its tradable market, it is used in manufacturing, people buy it as jewelry and other personal interest it has a demand that outweighs anything Bitcoin has going for it. As of now it is the basis of a few currencies.

Gold does lose value off and on weekly against Fiat, it stays stronger but the COMEX and the Fixing banks control its price as they deem necessary. it has paper contracts, and for those of you who do not know what that is, a paper contract is a contract a bank uses that moves the price of gold they way they want it to go.it is not real gold only an IOU from a bank saying yes we have this much gold and agree to buy/sell that gold to you at this time.

Bitcoin can not be pegged to Gold for the simple reason it has no comparison, as I have said many many times in this forum and bitcoin lovers choose to make excuses and ignore me, Bitcoin has no demand, it has no value other than its tradable market, no one has an urge to buy it, no one needs it and less and less people want it every day.

yes Bitcoin could have a chance to be priced at a specific value but this will only happen when it has a real demand, it has to stand out in a way gold and fiat do, people have to need it, want it and desire to buy it, until that happens you are stuck with only its tradable market value.

Utter falsehood. Bitcoin has ridiculous demand as recently shown by the purchase of the silk road coins, and is growing, its base value is the cost to produce it and that is rising as difficulty gets harder and harder, people do have the urge to buy (I know I have), people who needs to transfer large sums of money internationally needs it, and more and more people want it (I know I do) as adoption grows. Bitcoin may not go up as much as it's spreading.

Bitcoin won't be pegged to anything because someone says so. Bitcoin will peg itself to gold because it makes sense. As more people understand that Bitcoin and gold are a perfect marriage, the prices of both will reach equilibrium. Treasuries will find more security with crypto than vault records.

No "currency" has any real value other then the fact that there is demand for it. Gold has very little real value (much less then what the market gives it) but there is demand. Dollars, and Euros have no real value but people have demand for these currencies. The same is true for bitcoin.

Fiat currencies have value by fiat. That's the definition. You pay taxes with fiat even if you only do business with bitcoins.

I am not in favour of a gold peg due to manipulation of paper gold price.

Simple: as the chart below shows, there is no better way to continue masking the demand for physical gold than to keep selling paper gold, in this case via its most liquid manifestation, the GLD ETF. It is this ETF that just saw the notional value of gold "holdings" backing the paper manifestation of its "goldness", drop to just 776 tons, the lowest since 2008 and nearly half the maximum "holdings" of 1,353 tons reached in December 2012.

http://www.zerohedge.com/news/2014-09-20/meanwhile-heres-what-super-rich-are-rushing-buy

http://www.zerohedge.com/news/2014-09-20/why-china-russia-china-are-now-enemy

FFS.  Pegging?  Really???

Not possible to peg.

precious metals are manipulated down atm and will probably stay that way until the usd finally starts to gives up the ghost.

Why did you write "Bitcoin to be pegged to gold" like this was an announcement, or a news article conveying this fact to be true?

Are there click whores even on discussion forums?

If you're going to start a thread asking a question, dont make a title that looks like a factual announcement.  I hate reading that shit only to find out that the OP thinks he has a neat idea.

How would this even work? you cant peg Bitcoin two Gold, they work differently ..

Probably the same way gold ETFs do.

bitcoin (at this time) can  compete with Gold, bitcoin has a demand more than its tradable market,

this is because people are valuing 13mill+ coins based on PHP based exchanges that only play around with satoshi dust amounts. yet REAL bitcoin investors are not buying/selling bitcoins via these crappy php based exchanges.

think about when people in february finally realised they cant get their FIAT out of mtgox, bitcoin on mtgox sank to $100, whilst the other exchanges that were not freezing fiat withdrawals were still trading and remaining above $400.

same thing is happening now, the AMLKYC crap is preventing anyone from realy trading anywhere close to $10k, thus many are simply ignoring the 'public' exchanges and doing alot of private trades.

bitcoin is not just a replacement of paypal/debit cards for payments of goods and services. bitcoin is an investment vessel for stocks, gambling, shares, contracts, speculation and a whole host of other things. i think that cyberpinoy is just narrow minded and stuck in the mindset of the word 'tangible uses'. and has not truly understood what the word 'asset' means as many things do not have to have tangible uses, for them to be valuable.

Who would pay for the block rewards of the miners? As it stands now, the network derives it's value from the security of the network, so when a miner finds a block, keeping the network secure, "the network" rewards the miners in the amount of 25 BTC. However if bitcoin got it's value from gold then the fact that the network is secure would add little additional value to the network and the miners would have no way of getting rewarded

so far no one thing just increases value since its emergence. and all has deflation and inflation

Using Colored Coin, a licensed gold broker could issue their own gold bitcoins and back them with their own vault.

bitGLD? bitshares doing this.

i do not think bitcoin should be pegged to gold. as that means someone somewhere has to store 595 tonnes of gold, and we have to trust the entity will secure it..(if 1btc=1ounce of gold)

bitcoin should preferably be pegged to a value such as "cost of living" where for instance lets say 1btc= 2 weeks cost of living right now. and with demand rises, the value vs cost of living would change to maybe 1month per btc.

then every nation in the world can value bitcoin in their own way, either directly comparable to food/utility costs or comparable to their native currency without reliance on a dollar value first and then their native value.

this would help to stablise the markets. even if the dollar or the euro collapsed, people can still know that btcoin will buy them 200 loaves of bread today even if a dollar/euro value inflated due to collapse that made a loaf of bread cost $10,000 people can still be at piece knowing that they will always get atleast 200 loaves of bread for 1btc.

I agree that 595 tonnes of gold is difficult to store, but how do you store "cost of living" in a vault?  ;D

I like your creative thinking, may be it is a little bit hard to achieve it, but if there are many people supporting it, it is possible. Like it .

you dont, C.o.L is not stored.!!!

its just a common sense measure of true value of things people need in real life, such as bread and milk. it requires no trust, no third parties. and the benefits of pegging it to a C.o.L measure is that even if dollar fiat goes the same way as the Zimbabwe dollar. people know that bitcoin will still give them a fair value for a loaf of bread.

even when dollar start pricing a single loaf of bread at $1000, due to economic crash (massive inflation). bitcoin will ensure that you can buy atleast 1 loaf for 0.005btc.

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(edit to do some maths and get more specific.)

c.o.l = ~$300 per week (today)
minimum wage = ~$7.50 today ($300/40hours)
thus making bitcoin 1.5 C.o.L(today: $450)

ok using those numbers
based on c.o.l a loaf of bread is a maximum of 1% which works out as:
based on c.o.l a loaf of bread is a maximum of 0.0066btc ((1/1.5)/100)
based on c.o.l a loaf of bread is a maximum of $3 (300/100)
so right now in both cases you can get 100 loaves of bread for $300 or 150 loaves for 1btc

ok.. hope you got the maths understood..
now imagine dollar crashed and inflation made everything 400x more expensive (loaf of bread now $1000, C.o.L=$120,000)
bitcoin would still be at 1.5c.o.l meaning people can still buy 150 loaves per btc.

all it means that bitcoin converts to $180k a coin. thus bitcoin still keeps up with inflation to ensure bitcoin users dont suffer. whilst those sticking to crappy dollars are spending $1000 just to buy a loaf of bread.

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now lets move onto the positives of bitcoins deflation due to supply/demand for bitcoin

PLEASE wipe your mind of pre-valuing bitcoins to FIAT. imagine bitcoins on exchanges had no fiat valuation. just a C.o.L valuation
imaging demand doubled. this will mean that 1btc is now worth 3 weeks C.o.L,

deflation now means 1btc then equivalent to 300 loaves of bread.

so while fiat is giving less and less loaves of bread due to its inflationary nature and possible crashes (research Zimbabwe dollar)
bitcoin is giving people more and more loaves of bread due to its deflationary nature of demand/circulation

now thats been said. imagine exchange got rid of dollar measurements and got rid of the fallacy that a uro price or pound price should be measured against dollars. but instead measured against 1.5x a countries own native cost of living


and just have c.o.l measure being used on exchanges.

EG
buy orders___sell orders
1.501col_______1.500col
1.502col_______1.499col
1.503col_______1.488col
someone in europe would know their cost of living(weeks minimum wage) can be easily calculated
EG
UK £6.50x40 hours=£260 (1BTC=£390 today)
belgium €9.12x40 hours=€364.8(1BTC=€547.2 today)
america $7.50x40 hours=$300 (1BTC=$450 today)

why i call converting bitcoin to dollar and then to native currency a fallacy is because instead of bitcoins being 1.5 weeks of minmum wage of all countries. someone getting paid in america gets $300 a week(0.66btc). but if we were to convert dollar then to pound. someone in the UK would only get £184 a week which is way way below minimum wage. and if again one weeks wage, converted to dollar at their minimum wage and then converted to euros. means that they would only get €235 a week

we really need to stop pegging prices to dollars!! because right now UK and europe is getting screwed by everyone basing things on a dollar price. and not a fair value based on their own costs of living of their own nations.

but if people ignored the dollar and converted 0.66btc to 1 week minimum wage of native currency. UK would get £260 and belgium would get €364.8

If someone linked an altcoin to Urea i think is possible also to have a gold-linked altcoin. I'm more doubtful about pegging BTC to gold since how the peg whould be assured? Fiat currency pegs are enforced by central banks, in the case of BTC it's about re-writing the ecosystem specs.

It was always considered as gold...

Nonsense. It requires plenty of trust in whomever keeps the relied-upon figures for the cost of living. Here across the pond, our financial system is under incredible stress due to the whopping lie about what constitutes the official rate of inflation. Which should be -- truth be told -- exactly the cost of living normalized to unit measure.

Bitcoin and gold do NOT compete with each other. Neither do silver and the commodities (corn, beef, wheat, etc.). The only thing that competes is people.

The idea of Bitcoin and gold competing has to do with people trying to reap investment benefits from the people who work without doing work themselves.

Both Bitcoin and gold, along with fiat, should be used for making trading and bartering to be easier to do. The free market should be the thing that determines value relationships - automatic pegging. If there is manipulation through pegging, all it does is to steal wealth and freedom from people who think that they have a good medium of exchange in the particular "currency" that they use.

:)

Over the long term, it is impossible to peg Bitcoin to gold. In 2140 when there are no more bitcoins to mine people will still be digging up gold from the ground. There would be a net imbalance that can only be maintained  by shorting bitcoins or buying up all the excess gold being mined. Since bitcoins cannot be shorted indefinitely somebody would have to keep spending fiat to buy up gold to keep it scarce. Why would they do that?

Short answer: no.

You want a coin that's pegged to gold,myou need gold to back it, and the mans for people to easily convert back and forth.

Start gold coin

Buy 2.1 million ounces of gold.

Announce that for very gold coin that a user delivers to you, you'll deliver .1 ounce of gold to them.

Then there will be reasonable basis to peg a coins price to the price of gold. You can't just say this coin is pegged to the price of gold. That'd be a decree. Or, in terms that are used over and over here, by fiat. A fiat crypto currency.

If you want a crypto backed by gold, take a look at BIGBullion.

It was very good to me on the exchange this last month. Not to mention the coins are redeemable in GOLD!

Still a pretty new coin and very speculative. But I'm keen on it.

https://bitcointalk.org/index.php?topic=715904.0

Cheers,
Pit

Taking a glimpse at that thread, but failed to see the mechanism for comvertin coins to gold, aside from the developer saying it was so. Can you direct us to more details on that?

I like the cost of living suggestion but you are 100% correct on the complexities. In the US there are multiple ways of calculating the CPI and a lot of dishonesty. Additionally, There is no standard for determining COL and products and prices can vary.

I suggest indexing exchanges to CPA or "cost per alpaca" as that is the gold standard everyone can understand and rely upon.

https://i.imgur.com/gtBrSYo.jpg

Inncoin - backed by 100 grams of gold.  :)

https://www.cryptocoinsnews.com/new-gold-backed-cryptocurrency-inncoin-allows-mine-gold-free/

No way bitcoin should be pegged to gold.
Someone could manipulate gold prices and btc will crash badly.

you point is exactly my point.
(for continuity sake ill stick with C.o.L being 0.66btc (1.5weeks of C.o.L=1bitcoin))

again...
C.o.L is meant to be different.. thats the point that you CANNOT have one single price. ITS CALLED BARTER!!!

for instance, heres some valid statistics right now
Alaska    $310 C.o.L per week$7.75 x40=310
Arizona    $316 C.o.L per week$7.90 x40=316
Arkansas    $250 C.o.L per week$6.25 x40=250
California    $360 C.o.L per week$9.00 x40=360

those 4 states truly do have different values for cost of living because in california a loaf of bread or an average weekly rent is much more expensive than a loaf of bread/rent in arkansas

all it means is that for someones hard work of a week and a halfs labour they will get 1bitcoin.. and this is the same for every state 1 bitcoin for a week and a halfs labour. and that 1 bitcoin will buy them the same number of loaves of bread, no matter where they live. or more simple an average rent, grocery and car costs ( enough to live on for a week and a half)

yes i know that means that
Alaska    prices 1BTC as being $465
Arizona    prices 1BTC as being $468
Arkansas    prices 1BTC as being $375
California    prices 1BTC as being $540


lets go back to ignoring C.O.L right now. (ill come back to it..) but lets draw a line in the col for just one moment

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and use the current system of a single fixed dollar valuation no matter what state you live in, by every state ignoring cost of living and just saying that bitcoin(for continuity of posts) was $450, then for someone to buy bitcoin with their FIAT wage:
in california 1 person only needs to work 50 hours to buy 1 bitcoin
but...
in arkansas 1 person needs to work 72 hours to buy 1 bitcoin

do you think that is fair..??
thats right, in actual fact right now. in real life reality. someone in arkansas on mimnimum wage has to work 72 hours to get the same thing someone in california on minimum wage only has to work 50 hours to get.!! - think about that for just a minute

or would you prefer a system where EVERYONE no matter where they lived would all need to work just 60 hours to buy 1 bitcoin. and know no matter where they lived that 1 bitcoin WILL get them a week and a half's worth of living expenses if they sold out.
yes i know that means that
Alaska    prices 1BTC as being $465
Arizona    prices 1BTC as being $468
Arkansas    prices 1BTC as being $375
California    prices 1BTC as being $540

some will think that california is getting $165 more than arkansas.. but wake up.. it costs more to live in california so the actual financial benefit of spending bitcoin/fiat would be the same. both states will both get to buy an equal amount of bread, milk, baked beans, rent etc...

as for trust of value. you DO NOT need to rely on consensus of a fixed fiat price for the whole world, you do not need to rely on a central government department of statistics.. everyone knows what a fair wage looks like in their area, and they can all work out a fair price for bitcoin for their area.

every person thats not a teenager has a rough idea that 1 hours labour is equal to x loaves of bread, milk , cans of baked beans. and they can using local bitcoins find someone nearby that has a similar idea, and you both barter for a fair price and thatwill be easy to do as you both know that your area is at a certain level of C.o.L fiat value, because its common sense..

now ask yourself
would you really want to work for a company that screws people over by giving every employee $300 a week knowing that california and alaska is getting paid below minimum wage whilst the guy in arkensas is getting paid 20% above minimum wage.. or would you prefer a world where everyone working 40 hours gets an amount suitable for their area to cover their costs of living for a week. a week of work is a week of living.

No, this is patently unworkable. You say that everyone knows what a fair wage looks like in their area. Even if this were true (which it is most assuredly not), each one of these persons would have a different figure in mind.

I don't think this is what the OP was referring to. The OP was suggesting that 1 BTC = "x" ounces of gold. As more gold is mined then 1 BTC would be worth less of the total percentage of gold in "circulation" however this will somewhat be offset by the commercial uses of gold

it is a very brilliant idea. but I think it would be quite difficult and takes a long time to implement. they chose gold because gold is accepted in all countries, and the price is the same. so they are easier to fix. if I think of other options such as oil may be quite effective