Government is Backing Research Projects in Hopes of De-Anonymizing Bitcoin Transactions Crypto, Finance, News, Security, TechnologyRobocoin Announces Robocoin Banking: Bitcoin ATMs Become Bitcoin Bank Branches Bitcoin AnalysisBitcoin EconomicsBitcoin Op-ed Backing Bitcoin with Gold or Stocks Misses the Point of the Blockchain Kyle Torpey Advertisement: The idea of “backing” Bitcoin with some kind of tangible commodity or asset is back in the news again due to a recent statement from Senator Rand Paul.The Senator from Kentucky stated that he’d like to see Bitcoin backed by a basket of stocks because he believes that a currency should be “backed up by [something tangible]”.While the idea of combining gold and Bitcoin has already been floated by Jim Rickards and others, it completely misses the point of what Bitcoin is supposed to be.Bitcoin is the digital equivalent to gold, and backing it with anything tangible would add a dab of centralization into the mix.

[divider]CCN[/divider] Bitcoin is Censorship Resistant [dropcap size=small]O[/dropcap]ne of the main reasons that the bitcoin has real value on its own is that it’s censorship resistant and not subject to counterparty risk.jesus del bitcoinIn the past, virtual currencies have always derived their value from some real world asset.linux bitcoin data directoryIn the case of PayPal, you’re sending dollars to PayPal that they then hold them for you like a bank.ethereum viceThose aren’t actual dollars or euros in your PayPal account.bitcoin euro wahrungsrechnerYour account on PayPal is simply a promise to eventually allow you to withdraw fiat currency to your real bank account.bitcoin bowl 2014 time

In fact, the numbers next to “account balance” on your bank’s website aren’t even real dollars because the bank or a local government can make changes to your account too.ethereum atm locationsAt the end of the day, you have to get permission to send someone else money through dollar-denominated digital payment systems, and you can’t be certain if an individual could eventually reverse a payment sent to you in the future after they’ve changed their mind.cyprus bitcoin courseThe same concept applies to the various digital gold currencies that have popped up over the years.original bitcoin faucetUnless you have physical cash or gold in your home, you’re not the only one who’s in control of your money.litecoin features

Bitcoin Has No Counterparty Risk Now you could say that we’re now talking about a completely different argument due to the fact that PayPal, e-gold, and other virtual currency providers didn’t have access to the Bitcoin payment network in the past.Once we add the blockchain’s decentralized method of transacting value to a gold-backed digital currency, we would have the perfect combination of digital payments and tangible value!Actually, there’s another problem here.If you’re going to back a digital currency with gold, stocks, or any other asset, then someone is going to have to store those assets in a vault somewhere.This situation opens up the currency to counterparty risk.You could try to fix the price of a bitcoin to a gram of gold, but what happens if the local government decides they don’t want any competition in the currency market?They’ll just go collect the gold and throw the company behind the private currency in jail.What happens if the person or company storing the gold decides to sell it all without telling the users of the digital currency?

What if they only sell a little bit of the gold to setup a fractional reserve system?This is a key advantage that Bitcoin has over all other forms of digital payment.Liberty Reserve, e-gold, and Liberty Dollars were all shutdown because they had that central point of failure.Bitcoin is the One Who Knocks In reality, the idea of backing Bitcoin with some other asset is actually the opposite of what should be done.It would be more practical to back another currency, such as Evergreen, with bitcoins instead of trying to back Bitcoin with something else.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.It’s the first censorship resistant digital asset to exist.Bitcoin is the one who knocks.Photo via Gage Skidmore.Even though Monero is taking a serious beating in the bitcoin trading market right now, it’s US Dollar value remains intriguingly steady.In fact, there is a small gain on the charts compared to 24 hours ago, indicating Monero and other altcoins have become quite resilient to market fluctuations.

One XMR is still worth US$19.9, which appears to the somewhat of a floor for this currency.It is quite interesting to see how altcoins continue to stumble as soon as bitcoin’s value goes up.What is even more peculiar is how far things are less worrisome than most people would like to think they are.It would be better if altcoins and bitcoin could gain value at the same time, as they are not mutually exclusive by any means.Then again, it will take at least a few more years until such a scenario becomes reality.For Monero holders, not looking at the XMR/BTC chart would be the best course of action right now.XMR, as well as any other altcoin, is on a very slippery slide right now, thanks to bitcoin’s most recent value gains.This type of behavior has been prevalent for quite some time now and some things will never change.Then again, Monero seems to be bouncing back slowly, which is a positive development.To put this news into perspective, the XMR/BTC trading pair suffered from a 413% loss decline in the past 24 hours.