Bitcoin Forum

Can A "Junk Standard" Buttress Bitcoin Prices?
http://www.forbes.com/sites/ericxlmu/2014/10/09/can-a-junk-standard-buttress-bitcoin-prices/

Even in our world of fiat currencies, you often hear people saying that only metal or commodity-backed money count as “true money”. Gold standard is Paradise Lost and we, the unfortunate descendants of monetary equivalents of Adam and Eve, are punished by having to put up with “fake money” conjured up by fraudulent central banks. Bitcoin is not that different in the sense that it, too, is backed by nothing – some may argue that it is backed by math or the ingenious design of proof of work. But as the latest price movements seem to suggest, the electricity bill doesn’t translate into prices very well.

What if Bitcoin is backed by a commodity?


I thought that the beauty of bitcoin lies in the fact that it is backed only by the trust of the people using it.  :)

Even if a currency were backed by gold, what would gold be backed by?

A bitcoin "backed" by a commodity means there is a central party you must trust and who can be coerced.  This is the opposite of a distributed currency.  It is then subject to audits (like there have been calls for with Ft Knox in the US) etc. 

Talk about the author not understanding a basic component of bitcoin.

A gold backed currency would probably have controlled inflation. But hey, bitcoin already has that problem covered.

i would call it E-Gold. that would be pretty cool!