Topic: If Bitcoin was backed by Gold, how would it change its adoption? (Read 2894 times)

I have a lot more faith in bit coin than fiat all ready. If I could I would only use bit coin. Hopefully with more adoption I get my wish.

Touche.

In my view bitcoin is backed by the faith of the network of people that have invested in it.

bitcoin is backed my math and the networks' hashpower

The comment is not only wrong in relation to 51% attack. Even it were true it wouldn't be an argument for gold backing bitcoin, because if the system is somehow "compromised", how can you verify securely that anyone really owns the gold behind the bitcoins?

You can also produce counterfeit gold bars and coins (for example put some tungsten in it). In future gold might be produced as a by-product from nuclear reactors. So there isn't a 100% value guarantee neither.

To be clear: I'm not against precious metals. I just want to point out, that it makes no sense to back bitcoin with them (or with anything else).

There is something seriously wrong with this comment. 1. 51% attack does not alter past transactions due to checkpoints   2. The cost of 51% attack is extremely prohibitive 

Except BTC is code so it can also easily be altered.  51% attack and all that

Yes it's total nonsense.  You can always ask: What's backing gold? And then you will come to the conclusion, that gold is backed by nothing else than the effort needed to extract it from rocks. Creating bitcoin requires effort (energy), too. So bitcoin mining perfectly resembles gold mining on a virtual level (hence the term "mining" is used).

The concept of backing only makes sense when you have items like paper money that you want to have high trade value but that do not need much effort to create.
Bitcoin is unlike fiat money that can be created at will. So Bitcoin does not need backing.

Bitcoin is sound money like gold.

Attempting to back Bitcoin with gold would be like trying to back gold with silver. The bitcoin doesn’t need any help in the value department.

The only way to store substantial gold securely is to use undisclosed locations.  That doesn't lend itself well to a centralized, audited, "backed by gold" currency issuing institution which  as we know doesn't work anyway.  The idea is full of gaping security holes and also experimentally tested to be a failure.   

Currency equivalent gold position has gradually lost , however , gold and the dollar exchange is relatively stable , with gold trading with BTC , who take such a big risk?

This is why side chains would be good.  You dont want to divert the whole blockchain on an idea like this, its centralised and could cause a danger to the network from the then greater disruptive forces available to outsiders.
On the other hand it might be good to encourage participation and it might even work in a minor way to get further exchange and trade done involving bitcoins and other major trading means like gold or other commodities even.   I think I read the side chain would be done on a contract basis so that appears to match how commodities trading is often done, a fixed contract at a set price but with multiple ownership over time and with varied views on its eventual worth

This is a brilliant observation, which is why we are giving away 500 free ozziecoins, per person to the Aussie public.

I totally agree about that. Maybe I said it wrong because I mostly disregard it as a store of value. I do not sell bitcoin at all. I buy it, then spend it on the internet. It's utility as a payment network is it's real strength, IMO. 

Imagine two white stripes people. 

You're ignoring the fact that Bitcoin has several unique properties and only focusing on the store of value. While counterparty risk is a big problem, business solutions for transferring assets will evolve that take advantage of Bitcoin as a decentralized protocol. That's what Bitcoin 2.0 is all about.

Amen! If you are willing to take on the risk of another entity then you should use dollars. They are backed by the government. They have a sketchy record, but still may be more trustworthy than most companies. 

 Put it that way and it sounds as bad as the dollar.   Dollar is backed by the dollar and to pay bills they issue more dollars to buy the dollar debt that is supporting the government that is backing the dollar.    Thats ok then, not a house of cards  

That is a nice shade of blue tbh


Its an element, it does have that certainty at the least.    Gold is a luxury or a store of wealth, its not a necessity.   If everyone was eating their dinner out of cans with a hunting knife by a campfire because thats how poor we got, I imagine gold would be a long way down the rank of worthwhile objects to collect as trading currency.
Thing is wealth and excess do exist and gold correlates to that, theres always going to be some guy who does well who has a good idea and has his feet up.   He has no need to store an entire farm of corn as his wealth, something like gold can make sense in this context.
    I take the general point and the massive irony that gold really isnt needed but gold does definitely have a reason for its valuation over the centuries and its not likely to change.

   However some money more practical for the folks just working on a wage wanting an un-politicised unbiased even exchange of work/wages would be good too

To those who say BTC is gold 2.0, it really isnt.  Its something else, superior in some ways practical and others not nearly as certain in its standing and regularity ?
Its not likely a good mix between the two

And that ISN'T money laundering?

I can prove that bitcoin does not need to be backed by anything:

http://twentytwowords.com/canvas-painted-blue-with-a-white-line-sells-for-nearly-44-million-4-pictures/

A picture is worth a thousand words or $44 Million, lol:

If Bitcoin was backed by gold, it would be merely a token for gold. An IOU, literally. And whoever physically held/controlled the gold could alter the exchange rate on a whim. Or remove that backing on a whim. Or by Presidential decree, if you get my gist. A central issuer would decree that it has value, and thus, necessarily, what that value is, in relation to gold.

Bitcoin backed by gold, or backed by anything else, would not be Bitcoin.

Bitcoin is backed by Bitcoin.

Bitcoin the 'currency' is backed by bitcoin the protocol.

It's value lies in the secure record of transactions called the blockchain, and it's value is derived from the work required to effect that security, i.e. the work involved in 'mining', the cryptographic securing of the blockchain. Proof of that Work is implicitly proof of bitcoins value.

Or to put it another way, the faith in Bitcoin's value is inextricably linked to the faith in the security, that is provided by the work required to ensure that security.

As Andreas Antonopoulos says: "What is backing gold?"

if bitcoin is backed by something,i think bitcoin will go into a failure

buy and hold bitcoin is the most wisdom choice

it's still a long and tough way to go in the next decade

it would definitely attract a lot more peoples attention , although in the long run i dont think it needs that , that would also require some sort of centralization to back it

I think will be a good thing,most of the skeptical people will see it with better eyes a correlation between gold and bitcoin. Bitcoin and Gold price will go up.

I believe it wouldn't change a bit. You can exchange now gold for bitcoin and vice versa. The problem of long not accepting bitcoin is that it's hard and scary for ordinary people to understand how it works..like all brand new technologies it needs good marketing!

That's a very interesting idea, except this "gcoin" need not be a crypto anymore. No mining, no blockchain... Google will be the issuer, exchange and clearing, behind closed doors (but open for FBI/NSA).

That alt-coin is not "backed" by gold. I can not trade my coin for a piece of gold from them. They are no different from the federal reserve.

Bitcoin however can be exchanged freely for gold.

You do the backing, the FBI will come for you and steal your gold, so simple. Google Liberty Dollar.

Backing just re-introduces counterparty risk and we're back at square one with this whole thing. The emergent awesome of crypto is that Bitcoin itself behaves as an asset.

A subjective theory of value makes the whole premise boil down to infinite regression reminiscent of a child asking "if god created everything the who created god?". If a crypto were backed by gold, then what backs gold?

It would just be a pre-mine. Each coin would be worth say, 1oz of gold stored in a vault and audited by a third party every x number of months. It's not an insane idea. There are ETFs that at basically the same thing such as http://www.centralfund.com/. My fear is google just does a pre-mine and backs a coin with a certain number of their shares. The GOOGLE COIN.....the coin that doesn't fluctuate madly and is instantly accepted everywhere.

See my avatar, that was a coin backed by silver.   It didnt take off for whatever reason, so far as I know.  It was from last summer but as you avatars cannot be altered now


Bitcoin cannot be paired with gold, they are dissimilar.  Gold if stored is a means to disrupt and confiscate value of the network and it would cause a failure unfortunately.   Gold is still used mostly by very large entities such as governments which have the military to guard its centralised value nature.
   The simple answer is if you pair btc to gold, it will be taken for taxes as history has shown many times over very many years.    The only way thats not true is if the gold is distributed and the word for that medium is gold coins, just doesnt add up sorry


You can pay a jeweller or bullion dealer in btc, its been done for a while. no reason why not, the exchange rate varies of course.  If you wanted a genuine link it would be oil as alot of energy is used to extract gold, so they are naturally paired

If a crypto is backed by gold, then the gold reserve would need to increase by the same amount as the block reward each and every day. If not, the price of the crypto would just fall in proportion to the increase in the supply of the crypto. Is this possible to implement? Yes, I guess so, but who would want to implement it? It takes a lot of investment with no real profits.

Reading Ripple forums is truly a scary experience. Anyone who thinks Bitcoin is a crazy cult ought to look at those people!

Ripple is centralized. Also, have yet to see it properly explained, least of all by its backers.

It's possible with Ripple though:
What is Payment Protocol “Ripple” and How Does it Allow for Physically Backed Digital Gold Currency Exchange

It's not possible. It wasn't the last hundreds of times people thought halfheartedly about it and it won't be the next ten thousand times either. It's not part of the design.

I would rather have gold on deposit in a leveraged trading account than gold in my hands. I would trust 1broker.com with my gold just like I trust them with my bitcoins today.



It's scary to think that storing/hiding gold could become a risky endeavor due to US government monitoring in the near future:

Los Angeles County Sheriff's Department sent a civilian aircraft over Compton, California, capturing high-resolution video of everything that happened inside that 10-square-mile municipality

Even if you have gold in a brokerage firm, you can count on US government surveilance.

true, there was site that use to this, ahh  yes E gold, wasnt that same what was egold doing saying ur money is backed with gold

I think it would make a big difference. People are more familar to gold.

I have heard a lot about gold backed assets and currency. For me there is only one gold backed store of wealth, gold. If you don't actually receive gold that you can hold in your hand, then you have nothing. I mean if there were a gold backed coin then I would rather have the gold than a promise of gold. 

This will fail hard, google the liberaty dollar.  That is exactly what is going to happen, MERICA physically can't go kill the owner of bitcoin because their isn't one.  Merica is just going to go steal the gold and silver from whoever is holding it to back the crypto, zero questions asked.  They use the word terroism and everything is a green light.

Apparently, one altcoin already has precious metal backing:

https://bitcointalk.org/index.php?topic=598224.0;topicseen

That's not "backing", that's just a market trading pair. Backing means that the currency represents a claim on a redeemable asset. Bitcoin itself functions as the asset.

I think the impact of an exchange that allowed you to leverage your gold for trading instead of hoarding it would be radical. With gold I think it could make headlines. Already there is a site that is doing this with bitcoin and it looks like quite an attractive place for capital!

1broker.com userbase doesn't look like much only because it targets bitcoiners instead of gold bugs (and other non-coiners).

If you offered leverage then you could easily become popular with the right connections and some effort. Maybe next month JPM is recommending your product to clients... And to think, your site has this headline:

If you want more trading of BTC/XAU, get more shops to accept XAU. And BTC!


Actually, I was thinking that one could offer a leveraged gold product backed by bitcoin and controlled by SMS with connection to 1broker. Then, you could offer dollar-value insurance on the bitcoin gained from the gold trade.

Well first of of all if it was to be backed, who will it backed by, They will need to have alot of faith for it get backed by gold.  but if we did have backers and it was group that was well known then it could help it, but it might hurt it as well.

If I were to create an exchange for BTC/Au how would this help or hurt Bitcoin adoption? What kind impacts would this have on cryptocurrencies?