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P4man
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September 24, 2011, 10:22:01 AM |
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The backing of money by gold is not to give it inherent value, its to limit its supply.
Bitcoin has no need for that. It doesnt have limitless supply like our current fiat currency.
If you were to back bitcoins with gold, which really is like reinventing E-gold, you reintroduce a lot of the problems that bitcoin actually solves. With bitcoin there is no risk that whats backing it gets stolen, confiscated, isnt there cause its a scam, or loses it value (or increases dramatically in value). The fact its backed by nothing but supply and demand is its greatest strength IMO. The point of a currency is to trade it with goods and services that have the intrinsic value, giving the currency intrinsic value just messes it up.
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nighteyes
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September 26, 2011, 05:07:44 PM |
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The backing of money by gold is not to give it inherent value, its to limit its supply.
Bitcoin has no need for that. It doesnt have limitless supply like our current fiat currency.
If you were to back bitcoins with gold, which really is like reinventing E-gold, you reintroduce a lot of the problems that bitcoin actually solves. With bitcoin there is no risk that whats backing it gets stolen, confiscated, isnt there cause its a scam, or loses it value (or increases dramatically in value). The fact its backed by nothing but supply and demand is its greatest strength IMO. The point of a currency is to trade it with goods and services that have the intrinsic value, giving the currency intrinsic value just messes it up.
I dont see it as E-Gold per se. E-Gold sold its own currency. This would really just be selling gold...and bitcoins. I could see some gov trouble ahead, for sure though. The idea of someone anonymous holding a bitcoin thats worth a million bucks The gold doesnt give bitcoin any value, so Im missing that point. Bitcoin would still be bitcoin, and gold be gold, but 1+1 might be more than 2. Currency has problems and commodities have problems, so maybe we can work it out hehehe...for now. |
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Albert Schweitzer
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September 26, 2011, 05:25:05 PM |
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How to back up a decentral currency with something outside the internet?
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nighteyes
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September 26, 2011, 08:46:48 PM |
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How to back up a decentral currency with something outside the internet?
As I understand it....you have a backer who creates a transaction of say 1 bitcoin. Then sells something that is coupled with that transaction....so the "backing" follows the bitcoin wherever it goes. Send the bitcoin back to the backer for redemption....and there would be some process in transferring it. |
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Albert Schweitzer
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September 26, 2011, 11:06:25 PM |
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mh.. guess im too dumb. Dont get it.
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nighteyes
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September 26, 2011, 11:33:30 PM |
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mh.. guess im too dumb. Dont get it.
The transactions of bitcoins between wallets are held by the network....so you can trace back the history all the way to the beginning. So then lets say I own two wallets, A and B. I transfer 1 bitcoin from one to the other. Thanks to a unique transaction history I can say thats my coin now. It doesn't matter who has it since I can look back at the history and see that I at one time owned it...well, thats the simple version of it. The gold backing wouldnt move at the same time. You would need the holder to tell the backer that there is a new owner or what portion of the amount is another person's. |
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cruikshank
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September 27, 2011, 02:36:05 AM |
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mh.. guess im too dumb. Dont get it.
The transactions of bitcoins between wallets are held by the network....so you can trace back the history all the way to the beginning. So then lets say I own two wallets, A and B. I transfer 1 bitcoin from one to the other. Thanks to a unique transaction history I can say thats my coin now. It doesn't matter who has it since I can look back at the history and see that I at one time owned it...well, thats the simple version of it. The gold backing wouldnt move at the same time. You would need the holder to tell the backer that there is a new owner or what portion of the amount is another person's. Wouldn't that defeat the purpose of a decentralized cryptocurrency to tie it to a physical thing and turn it into an I.O.U? |
1JvnFCbMXAyeooPggF9snLAeg3A2QVV8eh
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Anonymous
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September 27, 2011, 02:37:39 AM |
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The fact is one day gold and silver will be easily synthesized by advanced nuclear technology. Synthetic value like Bitcoin is inevitable.
Welcome to the future.
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annelions
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September 27, 2011, 03:28:58 AM |
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The fact is one day gold and silver will be easily synthesized by advanced nuclear technology. Synthetic value like Bitcoin is inevitable.
Welcome to the future.
I think we're a long, long way off from Star Trek replicators.  |
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John Tobey
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September 27, 2011, 03:48:33 AM |
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gold and silver will be easily synthesized by advanced nuclear technology.
Gold has already been synthesized that way. At a cost... well above... market. I'd suggest developing a bacterium to concentrate it from seawater before you bark up that tree. Anyway, there is more than a thousand tonnes of gold in exchange-traded funds (ETFs; a form of IOU) worth c. $100bn--several orders of magnitude greater than cryptocurrencies. I hope and expect that to change, but it won't happen overnight. Between gold ETFs and Bitcoin, there are so-called digital gold currencies (DGCs), which let you transfer your IOUs to other end users as opposed to an exchange. The biggest of these comes to around $1bn: just 30 times Bitcoin. But in practice, people use DGCs to store value--like ETFs, only less convenient. They don't use them as money for trade in goods and services. Why not? It can not be due to their IOU nature; that reasoning would apply more strongly to storage of value, which is DGCs' most popular use. Could it be because transfers must pass through a central authority--the issuer's website? Keep the gold backing--valued by less savvy but wealthier market participants--and add decentralized cryptocurrency transactions, and you might make quite a splash. |
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P4man
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September 27, 2011, 07:25:34 AM |
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The fact is one day gold and silver will be easily synthesized by advanced nuclear technology.
Or someone figures a way to extract just a fraction of the 1.6 quadrillion tons of gold that are contained in the earth core  http://discovermagazine.com/2006/sep/innerfortknox |
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Immunooel Gu
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October 06, 2011, 07:57:41 PM |
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Zee fect is oone-a dey guld und seelfer veell be-a ieseely synzeeseezed by edfunced noocleer technulugy. Bork bork bork! Synzeeteec felooe-a leeke-a Beetcuin is inefeeteble-a.
Velcume-a tu zee footoore-a.
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EvryIntl
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October 07, 2011, 05:12:48 PM |
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The world will be an interesting place, for sure, if we can find discover a way to create elements from nuclear reactions of other materials. Frankly, I don't think it will happen. If it does, it changes what the definition of an element is.
As for gold backing, the real issue at play here is what the free market accepts as money. Gold has been accepted as money for several reasons: lack of usage in other applications, predictable supply increases, labor required to obtain it, divisibility and other physical properties, etc. However, the real value in gold is simply that its acceptance is universal.
Money has many 4 properties. Two of them are particularly important. One is that money is a store of value (hence the required labor factor). If it doesn't store value, it's just a currency - a legal tender - likely in existence only because of the monopoly of power that the state has. The other property is general acceptance as a medium of exchange - something that the state can make happen through force.
Gold has always been the currency of last resort because when all else fails, the market chooses gold because it has *both* properties. Governments have little desire to create money that has a real store of value because it disables the political class' ability to buy votes.
The sheer fact that bitcoins use energy for creation and that supply (at least rate of growth of supply) is limited and cannot be changed based on some central authority qualifies it to compete with gold and other monetary instruments. This, of course, has a few risks. The obvious one is that it's a natural enemy of politicians everywhere as it removes their mechanisms of control, but then again, that's a bitcoin's biggest advantage over gold. Remember, gold is generally accepted as a monetary instrument - that's tradition. Governments generally seek to disable that strength through tactics like confiscation and other abuses of the monopoly on force. But from a market standpoint, this makes bitcoins more attractive than gold. The decentralization aspect is the only reason that any serious attention should be paid to bitcoins. Otherwise, it has all of the risks of gold - so why not own gold with a longer track record?
Bitcoins have earned the right to compete in the market place. The timing is right. We'll see how the market accepts them in time. Forget a movement to back them with something - that's just eliminating their true value proposition.
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percymate
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October 08, 2011, 08:36:52 AM |
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It could always open up the possibility for someone to take the gold away and pretend it's there. I wouldn't trust that system at all.
Besides, just look at the Liberty Dollar. Feds moved in and took it down. Gold reserves make an excellent target for the Feds.
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cruikshank
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October 08, 2011, 09:12:26 AM |
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The world will be an interesting place, for sure, if we can find discover a way to create elements from nuclear reactions of other materials. Frankly, I don't think it will happen. If it does, it changes what the definition of an element is.
There is. Neptunium and Plutonium are synthesized rather than mined because only trace amounts can be found naturally. Pretty much anything heavier than Uranium has to be made. |
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EvryIntl
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October 08, 2011, 11:54:40 AM |
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The world will be an interesting place, for sure, if we can find discover a way to create elements from nuclear reactions of other materials. Frankly, I don't think it will happen. If it does, it changes what the definition of an element is.
There is. Neptunium and Plutonium are synthesized rather than mined because only trace amounts can be found naturally. Pretty much anything heavier than Uranium has to be made. That's true, but they're not made from other elements. |
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