Hey matt, what do you think about a crypto that was only traded for gold or something (meaning the users would not trade it for Fiat). I know it has many flaws (hard to divide a piece of gold for a fraction of a bitcoin). I made a thread similar to this subject (a few days ago in this spec forum and had slight discussions about this (on other threads here).
I personally think it probably would not work because people would just break the rules and exchange for fiat (and gold is too hard to break up and exchange for the cryptos)
If you mean a virtual currency backed by real gold. Been there, done that, and it failed spectacularly:
http://en.wikipedia.org/wiki/E-goldThat wiki page is a fascinating read; especially the part where they indicate the definition of money transmitter was broadened by the Patriot Act to include the transmission of anything of value. The government used that newly expanded definition to go after E-Gold as an illegal money transmitter. I would assume that new definition is still in place in our current days of Bitcoin.
