Rand Paul Thinks Bitcoin Should Be Backed By Stocks

[aztecminer]

Full article here:

http://newsbtc.com/2014/05/01/rand-paul-thinks-bitcoin-backed-stocks/

"And actually my theory, if I were setting it up, I’d make it exchangeable for stock. And then it’d have real value. And I’d have it pegged, and I’d have a basket of 10 big retailers. Because I read [Marc] Andreessen’s article a couple months ago. What fascinated me about it was those 2 to 3% margins. If you multiply that out for all of Wal-Mart and they don’t have to use Visa anymore, I’m guessing the people who have to be worried here are Visa and MasterCard. I think it would work, but I think, because I’m sort of a believer in currency having value, if you’re going to create a currency, have it backed up by — you know, Hayek used to talk about a basket of commodities? You could have a basket of stocks, and have some exchangeability, because it’s hard for people like me who are a bit tangible. But you could have an average of stocks, I’m wondering if that’s the next permutation."

doesnt seem like a very good idea since stocks are manipulated paper. then the federal reserve can manipulate the stocks using their ppt to manipulate btc.. maybe with a reset of gold and silver to their real values instead of manipulated values then maybe have something.. i think stocks is not going to be able to compete against any currency backed by gold and silver which is a real tangible asset. maybe that is what he really meant.

[cypherdoc]

Backing bitcoin with stocks is the absolute worst idea ever.

Before getting into bitcoin stock trading was my main means of investing. I guarantee you that it is a snake pit  full of manipulation and corruption. Just ask Patrick Byrnes about naked short selling. HFT's are a nightmare as the flash crash of 2011 reminded us. I'm out now, except for my pm shorts and am better off now for it.

Wait until we get the next crash; I'm sure it will be breath taking.

[solarion]

+1

Naked short selling is just a cute way of saying "counterfeiting". This is done regularly to manipulate prices. If Bitcoin "value" gets attached to paper instruments the way gold and silver have then we're screwed.

[Bit_Happy]

Rand Paul has proven to be really intelligent, so he will catch up.
When enough people kept asking him about Bitcoin, eventually he was bound to answer.
Over time he will learn all about it.

Yes.  And I think over time many people will begin to catch up. 

I was having beers with my dad a few nights ago (who's held bitcoin for a while now) and he was asking about why they have value and why they are scarce.  Trying to explain it really made me realize how foreign and mind-bending the concept is. 

I was explaining how bitcoins are very difficult to find.  That right now bitcoin miners across the word are testing 60 quadrillion numbers every single second looking for that special number that will generate the next bitcoin in the chain.  I could see that he would sort of "get it" for a few seconds--how difficulty adjusts automatically, how this keeps the inflation rate known, and how this creates the situation where producing a new bitcoin costs an amount roughly equal to its value at the time.

But he kept saying "that really makes my mind bend" and he is right.  Bitcoin is unlike anything else.  It is our first scarce digital asset and anyone can find them--you just need that magic nonce. 

You are fortunate to be able to have that talk with your dad.
It is our first scarce digital asset...
Need to make sure I memorize that, since it really helps to describe BTC

[NewLiberty]

It will be better if Bitcoins are backed by stocks, bonds, bullion and other investment material. The Bitcoin foundation can create a centralized Bitcoin exchange, and the profit from that can be used to purchase these assets.

Ugh... whatever.
TBF can do that, some folks might care, and if so it would be a central point of failure and attract attacks.

Better is what is already happening and what Rand Paul (and you) seem to be missing.
Bitcoin is backed by the full faith and credit of the p2p community of people that value it.
It is not backed by force, it is backed by our own goods and services.

For my own part, I am backing bitcoin with silver and gold.  Last year I committed to back it with 84 Million ounces of silver, redeemable on demand, and minted into Bitcoin Specie (link to the thread below).  Today that backing is inadequate and it has had to increase along with the value of bitcoin.
Anyone can participate in the DECENTRALIZED bank of bitcoin and back it with their own assets and services.  We all do this every day.

So what Rand Paul is hoping might happen, has already happened.  Many times over.  This decentralized system of valuation based on our own market making activities is far more robust than any central bank could hope to be, and much less costly.  We do not need a giant army to defend the fort where our gold is hidden, it is scattered all over the globe and individually protected.

We are the army, we are the bank, we are the issuers of the currency... and we need no central authority to give us permission to be that, it is an accomplished feat.  Done.

[NewLiberty]

+1

Naked short selling is just a cute way of saying "counterfeiting". This is done regularly to manipulate prices. If Bitcoin "value" gets attached to paper instruments the way gold and silver have then we're screwed.

Only if the instrument to do that naked shorting is used to set the prices of bitcoin in the p2p economy.
If we choose to ignore it for price determination, then the central banks can print as much money as they want to sell it naked short and no one will care.  Then that strategy will impoverish them and show their weakness.

Unlike gold and silver, taking delivery of the actual bitcoin is swift, easy, and doesn't require some insured massive vault and armored trucks and air-force planes to protect the delivery.  It happens swiftly and at low cost.

[cypherdoc]

+1

Naked short selling is just a cute way of saying "counterfeiting". This is done regularly to manipulate prices. If Bitcoin "value" gets attached to paper instruments the way gold and silver have then we're screwed.

Only if the instrument to do that naked shorting is used to set the prices of bitcoin in the p2p economy.
If we choose to ignore it for price determination, then the central banks can print as much money as they want to sell it naked short and no one will care.  Then that strategy will impoverish them and show their weakness.

Unlike gold and silver, taking delivery of the actual bitcoin is swift, easy, and doesn't require some insured massive vault and armored trucks and air-force planes to protect the delivery.  It happens swiftly and at low cost.

this is what i fear might happen with the Second Market exchange. 

the setup is there.  twice daily "prices" determined by auction by a closed set of major Wall St. players with the stated goal of limiting "volatility".  as if that really is a problem that is unexpected in a nascent currency that is only 5yo.  closed at night and on weekends like the legacy markets.

i smell price collusion and naked shorting close by. 

[solarion]

+1

Naked short selling is just a cute way of saying "counterfeiting". This is done regularly to manipulate prices. If Bitcoin "value" gets attached to paper instruments the way gold and silver have then we're screwed.

Only if the instrument to do that naked shorting is used to set the prices of bitcoin in the p2p economy.
If we choose to ignore it for price determination, then the central banks can print as much money as they want to sell it naked short and no one will care.  Then that strategy will impoverish them and show their weakness.

Unlike gold and silver, taking delivery of the actual bitcoin is swift, easy, and doesn't require some insured massive vault and armored trucks and air-force planes to protect the delivery.  It happens swiftly and at low cost.

Agreed, but it's still something to be wary of imo. People don't bother reading contracts even when they have large sums on the line. Case in point PM etf's that are optionally redeemable in fiat. The masses are too dull, busy, wracked with ADD, or some combination of all of these conditions to be bothered reading their own contracts. I agree that bitcoin's easy portability and cost free storage qualities are certainly an effective counter. I've no interest whatsoever in paper bitcoin exposure, unless it's a paper wallet for my bitcoins.

[adamstgBit]

i think its a gr8 idea.

have a market where to can place bids/asks on the DOW or S&P 500 etc.. with bitcoin

that would be gr8!

it would be so easy to for anyone in the world to trade in or out of that market, thanks to bitcoin

not sure why this idea is getting so much hate...

i say, do it!

[adamstgBit]

Rand Paul Thinks Bitcoin Should Be Backed By Stocks

Adam  Thinks Stocks Should Be Backed By Bitcoin

 

[jubalix]

Rand Paul has proven to be really intelligent, so he will catch up.
When enough people kept asking him about Bitcoin, eventually he was bound to answer.
Over time he will learn all about it.

Yes.  And I think over time many people will begin to catch up. 

I was having beers with my dad a few nights ago (who's held bitcoin for a while now) and he was asking about why they have value and why they are scarce.  Trying to explain it really made me realize how foreign and mind-bending the concept is. 

I was explaining how bitcoins are very difficult to find.  That right now bitcoin miners across the word are testing 60 quadrillion numbers every single second looking for that special number that will generate the next bitcoin in the chain.  I could see that he would sort of "get it" for a few seconds--how difficulty adjusts automatically, how this keeps the inflation rate known, and how this creates the situation where producing a new bitcoin costs an amount roughly equal to its value at the time.

But he kept saying "that really makes my mind bend" and he is right.  Bitcoin is unlike anything else.  It is our first scarce digital asset and anyone can find them--you just need that magic nonce. 

one of the reasons its mind bending, is that the education of fiat has value has been around for many generations.

most people can't conceive this is possible without a state issuer.

Every advert, job, house, purchase, even self worth to some extent has been measured in USD or other currency. They now are faced with the prospect that's not true....in a big way....consider BTC has evaluated between 500,000 x to 1000,000 times since its launch vs the USD. It puts the question irrefutably on the table. That 50,000,000 ~ 100,000,000%. I'm not sure there has be any such rise of anything in recorded history, perhaps commodities vs the Riechmark in the 1920's