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Author Topic: What do you think about this "Bitcoin-backed money" idea?  (Read 1007 times)
dsyahputera
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May 14, 2016, 12:06:41 PM
 #1

First of all, what is representative money:
A claim on a commodity, for example gold certificates or silver certificates. In this sense it may be called "commodity-backed money".

Then, what is gold certificate:
A gold certificate in general is a certificate of ownership that gold owners hold instead of storing the actual gold. It has both a historic meaning as a U.S. paper currency (1863–1933) and a current meaning as a way to invest in gold.

I just wondering if Bitcoin can also have representative form like the gold certificate. This representative form will be a paper that contain sealed private key. This paper will have face value that represent the Bitcoin amount it has. We could call this "Bitcoin-backed money". Futhermore we can use this Bitcoin-backed money just like we use paper money (banknotes) everyday.

How do you think about this idea?
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May 14, 2016, 12:22:21 PM
 #2

For me this good idea It would be better if bitcoin is certificate as other currencies before and can be known by many people around the world.
It would be good for the development of bitcoin later
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May 14, 2016, 12:37:36 PM
Last edit: May 14, 2016, 12:50:03 PM by 2c0de
 #3

This idea, almost as old as Bitcoin itself, also known as trading paper wallets.

First of all the seal is pointless because the individual who sealed it could see it before sealing, so it does not really prove the key is "secret"

Secondly, the user needs to check blockchain to verify the token indeed has the balance any time

Third , in a real world use, Bitcoin-haters, spies and cops see it's not cash so u can have trouble. This is how legal tender law is enforced.
Compare this with two people pressing buttons on their phones is completely stealth and not suspicious at all.

But yes, technically Two people who 100% trust each other that they will settle all debts anytime, do not ever need to actually pay each other. Simple promise is enough, an the promise can be denominated in BTC or USD or eggs or anything else. The result is exactly the same.

The promise can have any form, a piece of paper, email, facebook message, phone call, piece of paper with key I promise will not spend, etc

In real world the most likely result would be that the person who does the sealing spends everything at midnight, and the next day you got angry mob waving their just-emptied sealed pieces of paper.

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May 14, 2016, 08:03:29 PM
 #4

I'm sure that the intentions of this idea is good, although I don't see the potential or the need for such as of now. Bitcoin is yet only a peer-to-peer transaction. The question is that who would have the legal authority to confirm the validity of such certificates?

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May 14, 2016, 08:15:48 PM
 #5

Too vulnerable to be messed with. Then you got dilution problems too. The only way you can be sure is to crack the certificates open in which case there's no point in having them in the first place.
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May 14, 2016, 09:08:16 PM
 #6

Why not either just use Bitcoin normally or if you want to have a 'note' then print a paper wallet on some fancy paper? I don't really see the point of your idea. If I want to give someone BTC I'll send them some from a hot wallet on a mobile device.
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May 14, 2016, 11:03:57 PM
 #7

Why not either just use Bitcoin normally or if you want to have a 'note' then print a paper wallet on some fancy paper? I don't really see the point of your idea. If I want to give someone BTC I'll send them some from a hot wallet on a mobile device.

Well, theoretically, let's just say that a lot of people are starting to use Bitcoin every where in the world, and now it's the new "global" currency for literally everything.  Think of how many transactions are going to be on pending on every block in that scenario... I mean we are having somewhat trouble at the rate transaction are going right now, and "normal" people aren't using it.

Unless there is some revolutionary way to make the blockchain handle that incredible amount of transactions in "visa-like" fashion; there is no way to expect everyone to transact easily on the network without paying a ridiculously high transaction fee (which is what bitcoin is trying to get away from in the first place).
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May 14, 2016, 11:16:22 PM
 #8

To me I may be misunderstanding this but it feels like a bunch of work to achieve something you could do by just purchasing the bitcoin out right. Bitcoin would also have to reach a large segment for something of this magnitude to work.

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May 15, 2016, 03:32:08 AM
 #9

This idea, almost as old as Bitcoin itself, also known as trading paper wallets.
The idea is different from trading paper wallet. It's more to like to spend your money Bitcoin as a paper money.

First of all the seal is pointless because the individual who sealed it could see it before sealing, so it does not really prove the key is "secret"
I think there must be a foundation that issued the certificate.

Secondly, the user needs to check blockchain to verify the token indeed has the balance any time
Let me ask, did the people in the past who hold gold certificates will check whether the gold is really there?

Third , in a real world use, Bitcoin-haters, spies and cops see it's not cash so u can have trouble. This is how legal tender law is enforced.
Compare this with two people pressing buttons on their phones is completely stealth and not suspicious at all.
I do not have any idea about this.
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May 15, 2016, 05:40:28 AM
 #10

You mean, you or someone come out issue a piece of paper, also, you or someone promise, with this paper, anyone can come to you get this much bitcoins.

Don't see why this is necessary, and what is the reason doing this, since bitcoin itself probably easier to transfer than the paper. In old days, transport a ton of gold from north to south is prohibitive, but bitcoin is very easy.
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May 15, 2016, 05:48:44 AM
 #11


Don't see why this is necessary, and what is the reason doing this, since bitcoin itself probably easier to transfer than the paper. In old days, transport a ton of gold from north to south is prohibitive, but bitcoin is very easy.

I agree, from my understanding of the history of paper currency, it was started as way to help out the trades. Bitcoin itself is super at this.
dsyahputera
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May 15, 2016, 05:59:14 AM
 #12

Why not either just use Bitcoin normally or if you want to have a 'note' then print a paper wallet on some fancy paper? I don't really see the point of your idea. If I want to give someone BTC I'll send them some from a hot wallet on a mobile device.

Well, theoretically, let's just say that a lot of people are starting to use Bitcoin every where in the world, and now it's the new "global" currency for literally everything.  Think of how many transactions are going to be on pending on every block in that scenario... I mean we are having somewhat trouble at the rate transaction are going right now, and "normal" people aren't using it.

Unless there is some revolutionary way to make the blockchain handle that incredible amount of transactions in "visa-like" fashion; there is no way to expect everyone to transact easily on the network without paying a ridiculously high transaction fee (which is what bitcoin is trying to get away from in the first place).
Yes actually I thought about this idea for a moment where Bitcoin has become a global currency. Instead of waiting a few minutes to confirm the transaction (and perhaps in the future it will be much longer) it is easier to pay only with this banknotes Bitcoinnotes.

Don't see why this is necessary, and what is the reason doing this, since bitcoin itself probably easier to transfer than the paper. In old days, transport a ton of gold from north to south is prohibitive, but bitcoin is very easy.
Take a look at quoted post above.
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May 15, 2016, 06:18:19 AM
 #13

I just wondering if Bitcoin can also have representative form like the gold certificate. This representative form will be a paper that contain sealed private key. This paper will have face value that represent the Bitcoin amount it has. We could call this "Bitcoin-backed money". Futhermore we can use this Bitcoin-backed money just like we use paper money (banknotes) everyday.

Like these?


https://www.bitcoinsuisse.ch/en/physical-products/#Certificates

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May 15, 2016, 07:41:32 AM
 #14

If its usable physical crypto money thats being discussed, then maybe smoothie's Lealana LTC, or Mike Caldwell's Casascius are the closest examples. They never will be used as cypto money, of course, as its an oxymoron to have digital money mascarading as physical money. Maybe if some clever NFC tech can be employed, possibly, but you still have the problems of issuance, ongoing  security, and durability etc.
However, Mike Caldwell maybe thinks theres a future for paper cypto money.....i seem to remember Mike standing up at a conference (late 2013??), and waving his newly created uberbills in the air.
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May 15, 2016, 09:00:59 AM
 #15

bitcoin-backed-money is not particularly a good idea because, bitcoin is not a tangible asset. If a money is not based on a tangible asset, it will hold no value to the public. Only a few tech savy people would be interested to use it.

Acceptability will become a problem. If bitcoin can be physical asset, then probably it will have some value. Otherwise bitcoin is rocking in its current form.

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May 15, 2016, 11:47:39 AM
 #16

that's good for my part. if bitcoin has certificate, it will be legal in some countries, even world and my country. so it will make us easier to use bitcoins as currency.

when do you think bitcoin will be kind of thing?

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May 15, 2016, 03:05:35 PM
 #17

In many countries, printing your own money are illegal... This is why most countries classify Bitcoin as a commodity... if they acknowledged it as a currency, they would be allowing every other type

of attempt of people to create their own currency. In any way, most of these certificates are totally worthless... I can guarantee you, if you owned a large amount of gold and you want to claim the

actual gold for those certificates... they would turn you away... Why? ... because most of that gold only exist on paper or on a manipulated digital ledger. Ask the feds to show any credible auditor the

gold that are supposed to be in the vaults and they will also be turned away... {because it's not there} They will say, it is for security reasons.. but it's to hide the real proof... most of it, is gone.  Roll Eyes

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May 15, 2016, 03:42:27 PM
 #18

Sure you just got certificates you hold an ammount of gold ,doesnt mean they got that all to let you walk a way with it.Bitcoin its a currency not recognized by the countries,to it happen it would need to change the concept of bitcoin ,decentralization,and become regulated,and well people would left bitcoin almost instant as bitcoin is our currency and not from countries or politicians.
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May 15, 2016, 03:47:50 PM
 #19

I just wondering if Bitcoin can also have representative form like the gold certificate. This representative form will be a paper that contain sealed private key. This paper will have face value that represent the Bitcoin amount it has. We could call this "Bitcoin-backed money". Futhermore we can use this Bitcoin-backed money just like we use paper money (banknotes) everyday.

Like these?


https://www.bitcoinsuisse.ch/en/physical-products/#Certificates


I know, why don't we make Bit COINS? Huh? Best Idea ever or what?


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May 15, 2016, 03:58:01 PM
 #20

Why not either just use Bitcoin normally or if you want to have a 'note' then print a paper wallet on some fancy paper? I don't really see the point of your idea. If I want to give someone BTC I'll send them some from a hot wallet on a mobile device.

Well, theoretically, let's just say that a lot of people are starting to use Bitcoin every where in the world, and now it's the new "global" currency for literally everything.  Think of how many transactions are going to be on pending on every block in that scenario... I mean we are having somewhat trouble at the rate transaction are going right now, and "normal" people aren't using it.

Unless there is some revolutionary way to make the blockchain handle that incredible amount of transactions in "visa-like" fashion; there is no way to expect everyone to transact easily on the network without paying a ridiculously high transaction fee (which is what bitcoin is trying to get away from in the first place).
Yes actually I thought about this idea for a moment where Bitcoin has become a global currency. Instead of waiting a few minutes to confirm the transaction (and perhaps in the future it will be much longer) it is easier to pay only with this banknotes Bitcoinnotes.

Lightning Network is the pipeline with a first functional version for this year.Then you won't have to wait a few minutes if you are going to buy something with Bitcoin of bigger value.
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May 15, 2016, 04:07:32 PM
 #21

Lightning Network is the pipeline with a first functional version for this year.Then you won't have to wait a few minutes if you are going to buy something with Bitcoin of bigger value.

You will, otoh, have to pre-fund all your purchases, as you would by buying a gift card. In other words, if you want to use Lightning to buy your Starbucks coffee, you will first have to "create a payment channel" and fund it with enough bitcoin to cover all your future purchases.
Just like buying a gift card.
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May 15, 2016, 04:18:34 PM
 #22

This idea simply won't work because Bitcoin is a decentralized digital currency that can't function normally as a centralized paper-based physical money. We would need some kind of authority to issue these paper Bitcoin certificates otherwise people would go on a rampage scamming each other with empty wallets. How are we going to verify that the displayed amount of Bitcoin is actually not spent already? Plus the public Bitcoin key that is visible might not match the fake private keys that are enclosed inside. People would need to open and check the private keys upon every transaction and this will be definitely much slower than just transacting the coins digitally and be done with it.
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May 19, 2016, 03:53:51 PM
 #23

This idea simply won't work because Bitcoin is a decentralized digital currency that can't function normally as a centralized paper-based physical money. We would need some kind of authority to issue these paper Bitcoin certificates otherwise people would go on a rampage scamming each other with empty wallets. How are we going to verify that the displayed amount of Bitcoin is actually not spent already? Plus the public Bitcoin key that is visible might not match the fake private keys that are enclosed inside. People would need to open and check the private keys upon every transaction and this will be definitely much slower than just transacting the coins digitally and be done with it.

I hate to be that guy, but you know in this case that it would be the government being that kind of authority.  There would need to be some sort global system that logs all the "physical currency" private keys and put them into a data base that allows a quick scan at the register to check and see if the note is "viable"...

This is way too much, I think, and there will have to be another way for delivering small payments for everyday transactions.
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