Bitcoin, Gold-Backed Currency Can Coexist in Free Society: Ron Paul

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by Thinker

Ron Paul, a former member of the U.S. Congress and a Distinguished Counselor to the Mises Institute, has called for the legalization of competition to the U.S. dollar and a debate over the future of fiat currency, precious metals, and cryptocurrency. Writing for the Mises Institute website, he claims the U.S. does not have a free market economy since a conglomerate of people both in and out of the government run the economy, which is destined to crash. The Mises Institute promotes the ideas of the Austrian school of economics, individual freedom and world peace.

Central Planning Creates Problems

Paul argues against central planning of the economy.

By manipulating the economy, certain individuals prevent market forces from correcting the mistakes that central planners make continuously. In time, Paul believes the market proves to be stronger than government manipulation, but the longer the manipulation continues, the greater the “bubble that always bursts.” In the U.S., central planners want people to believe the dollar is strong and the reserve currency is secure, he noted, without considering the number of new dollars being produced. Politicians are quick to claim that the country’s high foreign debt is someone else’s fault, but not related to the government’s economic and monetary mismanagement.

The U.S. government publishes reports that claim inflation is low and should be raised under the guise that higher prices will indicate economic gains, Paul noted. He points to the Consumer Price Index and Gross Domestic Product as statistics that government officials manipulate to show economic growth. But anyone paying household bills knows these reports are false. During the Great Depression, the government controlled the price of gold and decided who received the gold. This was done to demonetize precious metals. Today, central bankers manipulate the dollar price of gold to create the impression the dollar is stronger than it actually is, Paul noted.

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Manipulation Continues

The system keeps stock and bond prices artificially high to benefit Wall Street, he claims. This is accomplished by keeping interest rates lower than market rates, which results in financial bubbles and economic distortions. Officials claim that “deficits don’t matter,” but this is a fallacy, Paul contends, and one that is setting the stage for an economic crash.

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A Guide To Gold-Backed Cryptocurrency

In 2017 the price of bitcoin reached parity with gold (by ounce) which grabbed the attention of gold investors around the world. With the current crypto mania there has been a surge in interest with the concept of gold-backed cryptocurrencies.

A brief history of digital gold currency

The idea of a gold digital currency has always had an appeal for those looking for an alternative payment system. Not long after the internet went mainstream E-Gold emerged as first digital currency backed entirely by gold in 1995. At its peak, millions of people around the world were using this service until it was shut down. Other attempts to make a digital gold currency were also made, but this was before the age of Bitcoin and blockchain technology. Now with blockchain technology established as a secure accounting method, and with Bitcoin becoming better known to the general public, a new era of gold-backed cryptocurrency is emerging. There is a proverbial (and literal) gold rush happening now in the crypto world, and even countries are looking to issue their own gold-based cryptocurrency.

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The basic concept is certainly compelling. A token or coin is issued that represents a value of gold (for example 1 gram of gold equals 1 coin). The gram of gold is stored by a trusted custodian (preferably third party), and can be traded with other coin holders. At a minimum the price of the coin will always equal the current gold rate. If the cryptocurrency becomes popular then the price of the coin can potentially increase in value, greater than the value of gold.

If the cryptocurrency doesn’t take off then the value remains as the value of the gram of gold. It’s like a built-in stop-loss.

There of course many risks as well. While the blockchain accounts for the coins, accounting for physical stored gold is another matter. When evaluating such tokens look for who actually owns the gold and how it is stored. In this regard our online gold partner BullionVault as a good example of accountable gold storage. When evaluating a gold crypto make sure that you own the gold.

Buy gold with bitcoin…ocurrency/


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