Tuesday, April 22, 2014

Rickards Suggests a Gold backed Bitcoin

In his latest article in the Darien Times, Jim Rickards suggests the idea of a gold backed Bitcoin.

In this article, Rickards talks about the tax problems that come with Bitcoin due to the recent IRS ruling as to how Bitcoin will be taxed. He also debates the pros and cons of Bitcoin as a currency concept.

What I found interesting in this article however was this paragraph:

"One solution to the bitcoin volatility problem is to link bitcoin to gold at a fixed rate. This would require consensus in the bitcoin community and a sponsor willing to make a market in physical gold at the agreed value in bitcoin. This kind of gold-backed bitcoin might even give the dollar a run for its money as a reserve currency, especially if it were supported by gold powers such as Russia and China who are looking for ways out of the current system of dollar hegemony."

Now I do not think that a gold backed Bitcoin will be coming. At least not in any major way.
Bitcoin advocates and backers are not interested in gold and do not see any need for gold backing. They tend to view gold as an old school currency alternative.

But I do ask readers to hold on to this general concept. I do think an asset backed cryptocurrency that will have the approval of the existing global banking system is a real possibility. Let's keep an eye out for it as things unfold in the coming weeks and months.

No comments:

Post a Comment