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View Full Version : Bitcoin is now backed by Gold and Silver!



Count Stacula
10-13-2017, 10:43 AM
I have read many posts about "if only bitcoin was backed by gold or silver" etc. etc. etc.

Well, ever since Bitcoin surpassed the value of one ounce of gold and one ounce of silver you could say that Bitcoin is backed by Gold and Silver.

Why? Because similar to the Federal Gold and Silver notes of years gone by you can, at any time, exchange your Bitcoin for Gold or Silver.

What's the difference? The only difference I can see is one exchange was mandated by the Federal Government at a fixed rate, the other exchange is regulated by the open market.

As a currency, Bitcoin is backed by EVERYTHING it can buy.

AnotherDave
10-13-2017, 12:14 PM
I have read many posts about "if only bitcoin was backed by gold or silver" etc. etc. etc.

Well, ever since Bitcoin surpassed the value of one ounce of gold and one ounce of silver you could say that Bitcoin is backed by Gold and Silver.

Why? Because similar to the Federal Gold and Silver notes of years gone by you can, at any time, exchange your Bitcoin for Gold or Silver.

What's the difference? The only difference I can see is one exchange was mandated by the Federal Government at a fixed rate, the other exchange is regulated by the open market.

As a currency, Bitcoin is backed by EVERYTHING it can buy.

Exactly! And it's the sole reason the FRN has any value as well: People accept it.

5700 to one.

Skidoo
10-13-2017, 03:36 PM
I like your logic but not quite what is behind the meaning of backed by ...? If you stay with your line of thinking it will always be worth something until it hits zero. Now, to produce a bitcoin does require some effort so I can't see it going to zero unless someone on the top of this pyramid decides to cash in all their penny acquired bitcoins for the top value it now sits at. Dumping that much digital currency will trigger major sell offs on this so volatile currency. I really can't say it is an asset since hit only exists in a form of digital binary numbers. Shut the power off to the Internet grid and poof you have nothing like a true physical asset you can hold in your hand. Yeah - ETF's are not assets either.

Ski

AnotherDave
10-13-2017, 04:31 PM
I like your logic but not quite what is behind the meaning of backed by ...? If you stay with your line of thinking it will always be worth something until it hits zero. Now, to produce a bitcoin does require some effort so I can't see it going to zero unless someone on the top of this pyramid decides to cash in all their penny acquired bitcoins for the top value it now sits at. Dumping that much digital currency will trigger major sell offs on this so volatile currency. I really can't say it is an asset since hit only exists in a form of digital binary numbers. Shut the power off to the Internet grid and poof you have nothing like a true physical asset you can hold in your hand. Yeah - ETF's are not assets either.

Ski

The meaning is that the currencies are supported by the trade that they enable. Take away the BTC or the FRN and some new currency will pop up to take their place. Come up with a system to replace binary numbers and make yourself very rich. None of these is very likely during my lifetime.

Shut off the power to the grid and "poof" you have much bigger problems than Bitcoin. But I'm sure there would be legions firing AKs from the rooftops in celebration anyway.

t00nces2
10-13-2017, 04:55 PM
I like your logic but not quite what is behind the meaning of backed by ...? If you stay with your line of thinking it will always be worth something until it hits zero. Now, to produce a bitcoin does require some effort so I can't see it going to zero unless someone on the top of this pyramid decides to cash in all their penny acquired bitcoins for the top value it now sits at. Dumping that much digital currency will trigger major sell offs on this so volatile currency. I really can't say it is an asset since hit only exists in a form of digital binary numbers. Shut the power off to the Internet grid and poof you have nothing like a true physical asset you can hold in your hand. Yeah - ETF's are not assets either.

Ski

We can only hope. I will buy all I can of millions of penny acquired liquidated Bitcoins, and I am not the only one.

Count Stacula
10-13-2017, 06:00 PM
I like your logic but not quite what is behind the meaning of backed by ...? If you stay with your line of thinking it will always be worth something until it hits zero. Now, to produce a bitcoin does require some effort so I can't see it going to zero unless someone on the top of this pyramid decides to cash in all their penny acquired bitcoins for the top value it now sits at. Dumping that much digital currency will trigger major sell offs on this so volatile currency. I really can't say it is an asset since hit only exists in a form of digital binary numbers. Shut the power off to the Internet grid and poof you have nothing like a true physical asset you can hold in your hand. Yeah - ETF's are not assets either.

Ski

The DUMP must come,but it will come very slowly.

I don't have that many bitcoins so how high does the value have to go before I am willing to part with what little I have? Much much higher than it is today. But for those who may have hundreds or thousands of whole Bitcoins they may be spending them into the market as we speak. Maybe not. Maybe $5,500 is not enough to get them to part with their stash either.

But eventually I agree. When the value gets high enough more and more Bitcoin will be "dumped" into the market. And by dumped I mean spent. Why turn bitcoin into $50K pieces of paper when you can exchange it for say 50 ounces of physical gold? If anyone were leery about the future of Bitcoin or any other currency then they would be quietly and slowly converting it into precious metals. Many people called "Stackers" have been doing that with their dollars for a very long time.

That is the only real way to insure that you can convert your wealth BACK into whatever the in vogue currency of the century is - right ?

One of the big differences between fiat paper dollars and bitcoins is that the dollar system is designed to go down in value over time. The Federal Reserve even admits that they have a "target inflation" rate they are trying to maintain every year. Price inflation just means dollar devaluation. I use to buy gum with pennies. Now it takes over a dollar to buy a pack of gum.

Bitcoins were designed just the opposite. The bitcoin is what increases in value over time not the prices of everything it can buy.

You could say the dollar is a depreciating asset and the bitcoin is an appreciating asset. With only 21 Million bitcoins to ever be mined you can see why this has to be true. As more people want to buy them and use them the value has to go up compared to all other currencies available. Simple supply and demand.

Eventually we won't even be talking in terms of "Bitcoin" but instead using the term "Satoshi" which is the smallest divisible part of a bitcoin. Just like a dollar can be divided into 100 pennies a bitcoin can be divided into 100 million Satoshi.

What happens when 1 Satoshi can buy as much as 1 Penny? Or what if 1 Satoshi can buy as much as 1 Dollar?

Wrap your mind around that for a minute and you will quickly realize that bitcoin is just getting started as a global currency.

zenith
10-14-2017, 11:35 AM
To say its backed by goal, which means the bitcoin is redeemable by gold at a fixed amount. The value fluctuates based on demand. Sure bitcoin is more valuable than Gold, but Gold price can rise to a point where Bitcoin cannot keep up.

There are some new interesting cryptocurrencies that issue tokens backed by gold like GBT and DIGIX, but i will wait to see if such model actually really work. Then nothing feels better than holding the real stuff, real bitcoins and real golds

AnotherDave
10-14-2017, 12:06 PM
To say its backed by goal, which means the bitcoin is redeemable by gold at a fixed amount. The value fluctuates based on demand. Sure bitcoin is more valuable than Gold, but Gold price can rise to a point where Bitcoin cannot keep up.

There are some new interesting cryptocurrencies that issue tokens backed by gold like GBT and DIGIX, but i will wait to see if such model actually really work. Then nothing feels better than holding the real stuff, real bitcoins and real golds

What is the weak link here? It is the will of the parties to honor their agreements. Name one gold-backed currency that hasn't defaulted on redemption. I'll wait.

And possibly in the future, gold holders won't be able to get their contractual BTC as well!