Gimmick or feasible combination of "real" and electronic money? Bussiness Spectator Just saw Bullion Baron's article about it here
It would be great if the notion of "backing" a digital currency (crypto or otherwise) worked, but unfortunately it doesn't. All such ideas are essentially no different from eGold. The reason is because there's a single entity guaranteeing the "backing" and providing the peg. If such a currency were to become successful and actually threaten the dollar, the backing entity would just get shutdown or regulated out of existence. The entire point of decentralized currencies like bitcoin is that there is no centralized entity to shutdown. If you "back" a decentralized crypto currency with something else, then you're adding that centralization and the backing therefore doesn't ultimately mean much. Heck, the traditional gold-standard idea is fundamentally broken because the government is the guarantor of the peg, and it will simply mess with it when it sees fit (FDR, 1933, anyone?). Gold served humanity very well as money due to its inherent properties: scarcity, fungability, durability, recognizability, etc... Bitcoin has all those properties as well. It is the first electronic thing to possess those characteristics. It needs no backing, and indeed, cannot be "backed" without losing the very thing that makes the entire concept viable and important: decentralization.
So really, the thing that has value is the network rather than the digital coins that flow through it.
You can't really separate the two. In order to be decentralized, the network needs its own unit of account. And the network doesn't have much value if it's not decentralized. So the value is generated by the combination of the two. Alternatively, look at the properties of the unit-of-account: they're much the same as gold. Bitcoin has value for the same reasons that caused gold to attain value over its raw industrial use: namely, it was useful in facilitating transactions for the way in which humans wanted to transact (in the past, physically with one another, hand-to-hand; now, electronically/globally/instantly). That's the guts of why anything we call "money" has value. Gold was directly useful in facilitating transactions for most of human history; ie, *until* humanity developed the need to transact rapidly over distance a century or two ago. That need to transact over distance triggered development of all sorts of messy stuff, like fiat currency, but now we actually have an elegant solution to the problem: bitcoin. So bitcoin provides the same historic transactional functions as gold in an online world, while gold still has the historical inertia as an inflation hedge and long-term stable desirable asset.
Yes, what you're saying about speed and distance certainly true, but again those are properties of the network, not the currency units themselves. The currency units (bitcoins) are only scarce by design, not by nature. If gold were comparable, we'd have people making up and releasing new forms of it every day like Gold+, SuperGold, A1Gold, ExtraGold, PowerGold, I-Can't-Believe-It's-Not-Gold, LuckyGold, RedGold, BlueGold, GoldGold, Happy Gold Force Ultimate (only popular in Japan) and the good old Former Military Adviser To President Awaha of Zambia Gold (which is totally there, but you'll need to pay $10,000 to Mr Stanley Gambawatata Esq. for expenses in order to be able to use it). The units of account aren't especially important when you can create entirely new currencies almost as fast as governments can print new units of their old fiat currencies.
TwoEagles: "he backing entity would just get shutdown or regulated out of existence. The entire point of decentralized currencies like bitcoin is that there is no centralized entity to shutdown." With bitcoin the govt can just shutdown and regulate out of existence any exchange and bitcoin to fiat conversion service. If it really wants to get nasty it just tells ISPs to ban customer access to URLs of bitcoin services.
But that would be enough to stop the mainstream from using it and there is no profit in just Dark Web uses for all the VC money and other piling in right now. All the hype is about how bitcoin will become a mainstream "currency".
I'll echo suchecki's point that while the gov could absolutely make it more difficult to use bitcoin, they cannot shut it down. Furthermore, while the US gov obviously has significant global financial reach, there are still a lot of countries in the world, and therefore a lot of competitive jurisdictions. As technology makes the world smaller, jurisdictional arbitrage gets more real and relevant, and a couple major western nations trying to strangle bitcoin like you suggest would open up big opportunities for other nations. Furthermore, do take note of all the VC money piling in. The cat is out of the bag. Decentralized technology has a way of spreading like a virus, and politicians aren't (usually) quite so stupid as to try and outlaw them with an iron fist. We *may* be at or near the point at which it'd be extremely difficult politically for the US to get super aggressive about killing it. That VC money talks, and now that there's serious buy-in (both financial and intellectual) among some of the smartest, wealthiest, and best-connected tech leaders, the political sway will follow. tl;dr: To *actually* squelch bitcoin, the gov would have to make it illegal for merchants to accept it and/or consumers to use it. We're either at or near the point at which such an aggressive, brutish approach is political infeasible in the US. And there are 200+ jurisdictions globally anyways.
Didn't they already launch this a year ago called inncoin ? Did that die ? Can't find any details at all about Hayek coin except repeats of the news article
Source: Now Bron....why does the Perth Mint not do this? Much coin. Many idiot. Much credibility. Can I have a freebie when you launch?
Ultimately these bitgold/digital crypto gold products are just a "layer" on top of standard online custodial services. To be 100% credibly backed by gold the coin issue has to be centrally controlled, which sort of defeats the point of using a blockchain technology both in that it is not decentralised and why have the inefficiency of distributed processing when it is easier to simply have centralised processing as you have a centralised issues of coin & gold behind it anyway. The only other aspect to this is to allow the transfer of coins between people, which again you could do centrally, but if GoldMoney with its massive user base got rid of gold payments because there was no interest and too much regulatory overhead, then I can't see what has changed that will make it a success now. In most jurisdictions payments in gold are treated as a capital gains tax event which kills the use of gold as money. No point setting up gold payments infrastructure when CGT exists, you first have to strike at that root IMO. This is all marketing gimmick, the market is not ready for gold payments.
And no point me mentioning doing a crypto gold when we have such out of date basic ecommerce website! Need to fix that first.
Something like this that lets on go in and out of gold/cash with the ability to fund it with bitcoin is abit more interesting https://www.bitgold.com/features https://www.bitgold.com/fees Already looks cheaper than something like PMDP And this https://bitreserve.org/en/our-vision/gold
and what is the "official price" and does that have some "padding" in it. Also, why the reference to "within", why can't they guarantee a fee/spread, doesn't sound like they are market making and guaranteeing a spread. and as for https://www.bitgold.com/transparency how about just showing your full buy and sell price.
Bitreserves fees aren't easy to find, its in the FAQ https://support.bitreserve.org/hc/en-us/articles/201868239-What-are-your-conversion-rates- 1.95% to go from USD to gold 2.4% gold to btc :|
