A lot of respected people, for example Doug Casey, used to say that cryptocurrencies are "backed by nothing” and therefore somehow inferior to the “full faith and credit of the US government”. But they have since changed their tunes after realizing that cryptocurrencies have far superior backing to those of big banks or governments. In fact, because of their immense power and faux legitimacy, there is no worse counter party than a big bank or government.
You would be far better off backing a currency with shares of Apple Stock, which is at least somewhat accountable to its shareholders and sensitive to its public reputation.
Cryptocurrencies can be backed by many things, including Apple Stock or gold in a reputable depository in a state that recognizes gold as legal tender (e.g. UPMA in Utah). In these cases there is still some counterparty risk in that either company could come under government coercion or internal scandal. But even in such cases, they would have some degree of backing value. If the backing collateral (value of the company) is more than double the outstanding currency, then this risk can be largely mitigated.
But the reason cryptocurrencies were invented is to completely remove counterparty risk. If you think of Bitcoin as the Decentralized Autonomous Company (DAC) that it is, and think of bitcoins as “shares” in that company, and the service performed by this company is to transfer ownership of those shares to anyone else in the world, then bitcoin is backed by the demand for its services and speculation about that demand - just like Apple stock.
Except that no one can seize your bitcoins like they can seize your Apple Stock.
Fancier unmanned companies are an even better counterparty free backing. BitShares is a smart coin factory and decentralized exchange and BTS is thus backed by the value of such a counterparty free, highly useful unmanned company. Priceless.
About the Author
That sounds like something i would say!
~ @bluerocktalk🖖
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I am truly amazed at how many gold bugs that I used to listen to have flip-flopped and now are into the crypto's.
Gold and silver are manipulated for now, but they will have their day again so I recommend buying bitshares and HODL your gold and silver!
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You have no idea! I first heard of Bitcoin through the Mises Institute's blog back in May or June of 2011. The entry reported on the hacking of Mt. Gox - yes, it was hacked in 2011. That post and related ones intimated that Bitcoin was a "pet rock" standard; mainstay commenters on the blog made it explicit. I still remember some Bitcoin evangelists holding their own against the "only gold is money" flak in the comments section.
Fast forward three years, and the Mises Institute starts accepting Bitcoin. It's now a Bitcoin booster.
Same with Zero Hedge. In early 2014, the mainstay commenters there were dumping on Bitcoin whenever it was mentioned in a post. There was a localbitcoins seller named Fonestar who seemed to delight in being the lone man arguing against a whole crowd: that's what he was doing. Again, the same scoffing: only gold and silver are real money, Bitcoin is a phantasm, etc.
And look at ZeroHedge now!
@stephenkendal is one of the folks who crossed over from precious metals to cryptocurrencies. That's why he still makes comments on gold and silver stocks; he had a legacy following on Twitter from his gold- and silver-bug days.
Another one, interestingly enough is perennial bull and #Monero whale Risto. He came into Bitcoin after getting out of dealing silver. He made a lot of money, some of which he rolled into XMR, but he was also notorious for hysterically predicting that Bitcoin would skyrocket to $1 million a/o 2015 - and then checking himself into a Finnish mental hospital after a nervous collapse. Still, the fellow's made out damned well and he deserves some admiration for sticking to his guns.
Now that you've broached the subject, I wonder how many crypto-rich will transfer some of their gains into gold and silver.
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This is interesting stuff NXT..thanks for sharing...cheers friend
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Man brother you know your stuff, just picked up a new follower!
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Thanks, and likewise!
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I agree! I like to ask people this, "what if every time you posted, commented or liked something on Facebook, you earned a fraction of Facebook stock? How much stock would you have today? We'll FB doesn't give you stock for engaging...but Steemit.com does! Check it out!" That analogy has started to turn heads. I do agree the coins are like stock in companies like Apple! Thanks for the post!
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That is a great point. Facebook I think Steemit is far advanced and a contender for one of the best DACs of 2017.
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Sadly most of the people who I told about Steemit told me AGHH that is a scam, it is a scam WHY WOULD I make any money just from commenting, sadly some people will never change the way they look at "crypto world" and Steemit until it beacomes mainstream
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Yeah, I get that quite a bit as well. If they don’t get it now they will soon enough, it’s the ones who adapt early that will get the most rewards!
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And this is why I love BitShares :)
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Bitshares,Steem and EOS-in Dan and Stan we trust!
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@stan,
Who backed Fiat? For me no one! Banks (Central bank of the country) make them in the thin air. There are no ledger how much of Fiat printed and how much of fiat in the market place.
But in crypto world, everything is in a ledger. So if someone says crypto is not backed by anything, I would like to say, whole world backed it, only banks hate to do that :D Coz they fear to hear the truth!
Cheers~
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The one thing I think most people overlook with the BTS exchange is being able to quickly swap into gold, silver, and fiat backed coins (bitUSD etc). My one gripe with the exchange is not being able to trade many of the top100 coins, @stan is there any plan to add more coins, I see some on there like OMG, but I don't know how often they are added or the process that needs to happen for them to be added.
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I also like the bitMetals markets. It is interesting to see how new DEX users will interact with AG & AU.
Unfortunately at the moment only Gold is tradable - Silver is in a global settlement period.
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I rather something backed my code, math and decentralization
VS
Fiat run by an elite few who do not have my best interest at heart
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So was the Mises Institute a/o 2011, when I first heard of Bitcoin (through one of their blog posts.) I have to say, the Bitcoin evangelists in the comments section did hold their own: so much so that I almost signed up for Bitcointalk back then so as to write a post on why Bitcoin did satisfy Mises' regression theorem. In part, because the "only gold is money" crowd struck me as peremptory.
I didn't sign up then because I choked: after looking around about hackings, I saw "keystroke logging malware" and went into nerd fright. That fright combined with writer's ego caused me to choke.
Bitcoin, and of course Bitshares, are a real treasure for economics in that they're living case studies about how speculation can create real value down the road. I'm painfully aware of how much of an outlier this is. But Bitcoin, and of course, Bitshares, managed to attract a whole crop of doers who had great ideas but lacked the capital to implement those ideas. The rocket-up of crypto gave them the capital, or at least the confidence, to go ahead with the implementation.
Here's a quick hypothetical example: imagine an alternate me who was not frightened off in 2011. "I" bought 1,000 Bitcoins in '11 and held onto them until Bitcoin broke $1,000 at the end of '13. At that point, I feel a tug of obligation because I essentially rode my way up to affluence.
So, I buy a well-trafficked store, equip it to accept cryptocurrencies in payment, stuff crypto brochures in the bags of every customer, and put a big sign on the front window saying "Bitcoin Accepted Here!" Even if the Bitcoin trade proves to be minimal, I'd still be evangelizing for Bitcoin as a straight currency.
Bitshares went through a similar growth. Its speculative value has attracted real businesses.
It's almost magical. As an important bonus, the ideology of decentralization has gotten a huge push because of crypto's huge collective market cap.
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"Nerd fright". Well said. It's important to appreciate the difference between innovator/early adopter mentality and the general herd mentality. Predicting the herd response lets you have a lot of fun riding that wave up and down.
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Cryptocurrency is backed by mathematics, cryptography, the internet, and the global distributed network of computer hardware and software that is the foundation of our technological society.
There is no better and safer backing than this. Much better and safer than gold or precious metals, which can be seized or manipulated by governments.
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Bitshares, HERO, GOLD, SILVER - ALL SOUND MONEY
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@stan your post is marvellous, it's absolutely out class. Its full of information about cryptography and it's help me a lot.
You are a excellent blogger.
Please support me
Thanks
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Hey @stan, thanks for the post! That's a great company analogy that makes it easy to explain Bitcoin and understand Bitshares (and many other cryptos).
I have a question. Where would you recommend to read more about companies that build their business on Bitshares?
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Sooner or later I have or will blog about them right here at steemit.com/@stan
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@alex.welcomes . good question
@stan we will be waiting
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Good job @stan
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There are much larger problems than "backed by nothing".
Why anyone that supports digital currency over physical money like silver and gold is the enemy of humanity:
http://steemit.com/bitcoin/@r0achtheunsavory/the-r0ach-report-38-anyone-who-supports-digital-currency-over-silver-and-gold-is-the-enemy-of-humanity
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Crypto currencies is really going in a high end and am really happy alot of nations are accepting it as a legal tender especially my country Nigeria and i have heard nations who really have accepted it the likes of Russia and Germany are keying into it. And though we got about 1500 crypto currencies now and alot with its varying values,yeah bitcoin is a C+ in the crypto market chat haven in fluctuation recently but from 2015-2018 statistics,at this period of time;bitcoin its at a falling side but in no time,it sure will bounce back. Thanks for really sharing this encouraging info with us..i highly appreciate.
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And while we are at it: Every human on the planet becomes their own bank. We each issue our own token and back it by our labor/ingenuity.
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Ok, I follow you.
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Well I think sometimes some people somewhere just feels that one day cryptos may upset fiat currency as a legal tender
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Cool!
Followed, follow back?
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When initially looking at crypto currency's, this was one of my big problems. I wanted to invest in one that had some sort of backing, and also a good plan for them moving forward. Of course i settled in on Bitshares and similar currencys such as EOS and HERO. Thanks for the post Dan!
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You are absolotly right.I agree with your conversation.
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will what can i say on this just love bitshare
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Awesome! I'm going going full on with Bitshares. I think it will be the king of crypto-currencies. It already is in character.
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@stan Good job And this is why I love BitShares .That sounds like something i would say!thank you are post
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Does anyone know how to check trade history on bitshares? I can only go back 2 weeks. Thanks in advance!
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Crypto are the future of Mankind in case of holdings and cash !
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@stan Got a 13.16% Vote via @steem-global
Make sure to include the link to your post in the memo field of the transfer!
( Any amounts < 1.000 STEEM or SBD will be considered donations )
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Will see what happens but for now - enjoy the living in the times of change.
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Great point, I think most people simply don't understand how currencies get their value. It is all supply and demand like everything else. I wrote about it in one of my first posts https://steemit.com/currency/@littlejoeward/do-currencies-need-to-be-backed-by-something-the-difference-between-currencies-and-commodities
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hi stan,
these posts have been informative and I am enthusiastic about BTS in general, it is something that just works and integrates with steemit very well.
I am promoting some of my work to people I think could use it or appreciate it, you are one of those people. I would enjoy hearing what you think or you may find it useful to share with some people you think might need to hear it.
https://steemit.com/surveillance/@mindhawk/privacy-workshop-3-you-are-a-channel
I'd enjoy hearing what you think, and if possible, your participation in privacy workshop if you have anything you think I'm overlooking.
Best, thanks in advance
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Very nice work! I think that Satoshi opened a new era in the age of economics and computer science (to say the least), and with bitcoin many problems are solved as well (the centralization problem, the double spending problem).
I am still very new into the cryptocurrency world (I only started to know about it a few months ago) and I am trying to educate myself as much as possible. I have a question. What challenges do you think that bitcoin has to solve in other to improve the velocity of its currency? By saying velocity I simply mean the rate at which the currency is circulating in the global economy.
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Very nice...
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Thank you Stan for sharing your wisdom. I translated your post for the Esperanto community.
https://steemit.com/esperanto/@johano/backed-by-nothing-in-esperanto
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Cryptocurrencies, like other currencies depend on trust of use of the token. Although, most currencies require some sort of financial backing. As a newbie I'd just like to ask why is Bitcoin used as a reserve currency in cryptocurrencies?
I am aware that your bitshares differently.
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@stan
I can link this process to a term called Merger and Acquisition in company Law. Here, the cryptocurrecies hold the position of acquisition and acquisition means a total takeover or complete dominance. Crypto may really be back up but the value is always constant.
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There’s no doubting the fact that Cryptos are making a significant impact on the way we think about money movement and currencies in general. It’s hard to argue anything different when Bitcoin is up over 700 percent already this year and up over 3,500 percent since its January 2015 low. The numbers make a pretty compelling case.I am very excited about the prospect of using cryptocurrency, not just as a money equivalent, but using it as a way to earn something as a result of doing some type of work. @stan
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