Bitcoins backed by gold launched  

June 23rd, 2011 by Irdial 1DnwFLXczVZV8kLJbMYoheUrpqHesjxrSi

There is another interesting article over at Lew Rockwell about Bitcoin, which is a transcript of a conversation with Doug Casey, who we have blogged about before. This man is a truly great speaker and thinker, and as proof of this, I direct you to watch Mr. Casey in action.

In the interview, Doug Casey says something truly astonishing, because if it is true, it means that the next iteration of Bitcoin is already here and is sure to fulfil the promise of a decentralised, unregulated, freedom and pure value centred money. Here is the line that I am talking about:

So, way before the dollar value of Bitcoins stepped off a cliff last weekend, I was telling people who asked me that I didn’t use them and didn’t plan to use them.

Frankly, I can’t see why anyone would, when there’s already an electronic digital currency like Bitcoin but backed with gold: GoldMoney. I should disclose that I’m a small investor in the company.

http://lewrockwell.com/casey/casey89.1.html

My emphasis… What?!

An electronic digital currency like Bitcoin, backed with gold?!

I had to find out more about this!

GoldMoney has a good looking website:

http://www.goldmoney.com/

It says its ‘simple and secure’ and that you have ‘Complete ownership of the metal you buy’.

Better and better!

But where is the ‘download’ link? I want to start using it right now!

When you click on ‘Find out more about how to get started with GoldMoney’

Ooookkkkkk.

OnMouseDown we are not presented with a link to some software but instead we are displayed the following:

At GoldMoney we make it very easy for you to conveniently buy, own and store precious metals. The first step is to sign up for free to open a Holding, which is a personal record of your activity in GoldMoney and the metal you own. After a short verification process, you can transfer money to fund your Holding and start buying metals to preserve your purchasing power.

You have to sign up for a ‘holding’, complete ‘identity verification’ and then transfer funds.

Personal Record?
Verification process?

This doesn’t sound like Bitcoin at all!

It gets worse.

They then ask you for your country of residence. What on earth has that to do with MY MONEY?

And then it gets even WORSE:

Country of Residence

Depending on the country you live in, you can sign up for different types of Holdings. GoldMoney accepts customers from 93 countries. If your country of residence is not one of the countries listed above, unfortunately we are currently unable to accommodate your application. If you are temporarily living in a country not listed above but your primary country of residence is on the list, please contact us to discuss your situation. For example, if you are an international aid worker temporarily assigned to a non-listed country but your primary residence is in the UK, we will most likely be able to accept you as a customer.

If you move to another country after you open a Holding, please take into consideration that this could affect the type of Holding you are able to have.

Netherlands & Netherlands Antilles

Due to a review on the rules applicable to the sale and storage of precious metals, we are currently unable to accept applications from Dutch residents.

Sucks to be Dutch then. I guess that the Dutch don’t have any property rights. I guess that if I am Dutch, I can’t spend money on the internet, with this ‘Bitcoin like’ money. What?

And then it gets unimaginably worse:

We claim that we are from Italy, and then say submit. You then get this:

Enter your name and contact details during the sign-up process

Upload a scanned image of a bank statement or bank cheque before the initial funds are sent from your bank account

Upload a scanned image of your photo ID (passport, national ID card or driver’s license)
Send a certified copy of your photo ID and an original bank statement or utility bill along with a completed CAP Form (letter or A4-size) to us by post

Additional verification of your identity and the source of your funds may be required depending on your circumstances and the Holding value

Unbelievable.

And this, given the interview, is the most surprising thing of all:

Security and integrity

As a company regulated by the Jersey Financial Services Commission, GoldMoney complies with anti-money laundering legislation, which requires GoldMoney to know the identity and residential address of each of its customers. We make use of a Customer Acceptance Policy (CAP), to ensure the security and integrity of the GoldMoney system. More information about the CAP and how to sign up for your GoldMoney Holding can be found in our CAP FAQ.

But in the interview, Casey says:

That’s why the U.S. government and its media lapdogs have been so antagonistic to Bitcoin, claiming it’s primarily of interest to drug lords who want to use it as soap for their money laundering. They always mention it in conjunction with Silk Road, which claims to allow purchase of any drug through mail order, using Bitcoin as its payment system. I have no problem with that, but it’s a totally impractical idea in today’s world. It’s just an idea intended to scare witless Americans. Frankly, I’m disgusted at the fact money laundering is even accepted as a crime; thoughtless people believe whatever they’re told. It’s not a crime, by any rational definition. But that’s another subject for another day.

Well, I certainly agree with that sentiment; there is no such thing as ‘money laundering’… but I digress.

This service is as far from Bitcoin as you could possibly be. There is no software to download, you cannot buy and sell it from anywhere without restriction, you have to integrate with the state at a very intimate level, indeed, they cannot even offer this service to everyone, even Europeans like the Dutch, thanks to the State.

What if the State says that all gold in private hands is to be confiscated, as they did in 1933, and as they appear to be heading for right now. Is this company, for ‘Security and Integrity’ going to simply go along with the State and steal your money?

Who knows. Who cares.

I would never put my money into a service like this where the State is alerted of all your details and ‘holdings’. They offer no utility whatsoever in comparison with Bitcoin. You cannot spend your GoldMoney at retailers directly, you can only redeem your stored gold for cash, which you then have to either take in person or spend through another intermediary if you want to buy something from Bangalore. And of course, there are the myriad fees and taxes you have to pay each time you move YOUR MONEY around between these entities.

This is the reason why Bitcoins are valuable. There is no service like it anywhere.

You can get started with them instantly.
You do not have to identify yourself.
You can use them from any location.
You can send them to any location.
You can fund them with any currency.
You can spend them immediately.
Your transactions are private.
There are no taxes on transactions.
Transaction fees are so small as to be irrelevant, and if you are a miner, you get the fees back from other users.

All of these features and more make Bitcoin a tool with a very high level of utility. Bitcoins are scarce, and you need them if you want to make purchases without the onerous and illegitimate predations of the State.

If the ideas of Liberty are spreading, and they are, Bitcoin will have a very large and primed population of users who recoil at something like GoldMoney.

The utility of Bitcoin, which is a function of the number of users who want it, will entrench it, or at the very least, the idea of it.

We will never go back to government run money, just as we are not going back to music pressed on vinyl. The quality of sound has been sacrificed for Digital Convenience, and more music than ever before is in everyone’s hands, accompanied by a new economy where the middle man is being killed off. Digital music is here to stay, and so is Bitcoin. The middle men are going out of business, and everyone is going to benefit.

The frictionless utility of Bitcoin, like the experience of finding music, books, films and software and then downloading them immediately is something that once you taste it, changes your perception forever.

No one who uses Bitcoin is going to accept GoldMoney as ‘digital currency like Bitcoin’. Its like saying buying DRM’d iTunes files for 99¢ is like sharing FLACs on IRC / Dropbox with your friends (sorry, I slipped into ‘tecchie speak’ as the illiterates call it. What I mean is the experience of downloading and sharing unencumbered music files that you can play anywhere, freely, between friends and colleagues for nothing, is not at all like paying money for files from Apple, where what you get are files that you cannot share or use on all of your music devices. Apple is a cumbersome, restrictive and invasive intermediary vendor that spoils your music experience. Is that better? I can only dumb it down so much… sorry!).

The genie is out of the bottle, just as it is with file sharing. Eventually no one will pay for entertainment files. It will be culturally unacceptable and commercially impossible. Similarly in the near future, no one will accept that you cannot spend your own money whenever you want, however you want, without anyone other than you and the recipient having a say in it.

Bitcoin, or its immediate decedents will provide the secure infrastructure for this, and most certainly not GoldMoney or services like it.

This does not, obviously, invalidate the immutable, irrefutable idea that the best money is gold. All it means is that on the internet, if you want to spend money, the best way to do it is Bitcoin. It is the easiest, the most Libertarian styled, the most secure (yes, the most secure, all the recent problems with Bitcoin users have not been due to a problem with Bitcoin, but with the people who are running it and the incorrectly managed computers that they control) and transparent way of spending money.

Finally, it seems like the Ghandi rule is sweeping through the Libertarians who at first, instinctively and irrationally railed against the idea of Bitcoin.

The people on the wrong side of history appear to be very quickly moving from the laughing stage, and are already past the fighting stage it seems.

Bitcoin has already won.

First they ignore you, then they laugh at you, then they fight you, then you win.

UPDATE!

Jon Matonis hit the nail on the head about this company back in 2009. His article is just the sort of thing that journalists cannot produce, and that the best Bloggers are good at; concise, rational even handed, insightful and purely fact based writing that spells it out just as it is. Read it!

And check out this informative, in depth interview with Mr. Matonis: 

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5 Responses to “Bitcoins backed by gold launched”

  1. Why Are Libertarians Against Bitcoin? | Run Red Hot! Says:

    […] And so it is that our prominent gold and monetary freedom advocates come down against bitcoin. Focusing on Casey’s incorrect GoldMoney statement that we already have something like bitcoin, yet backed by a precious metal, Blogdial embarrasses the libertarian with the sarcastic “Bitcoins backed by gold launched “. Blogdialstates: […]

  2. Is GoldMoney A Gold-Backed Bitcoin? Says:

    […] except that GoldMoney is better because it is backed by gold. As has been aptly pointed out, Doug Casey is wrong on that issue. There is a huge difference. GoldMoney is not just a gold-backed Bitcoin. GoldMoney […]

  3. A Pretty Good Bitcoin Interview Says:

    […] is not lost though that Doug Casey, like David Kramer, gave an opinion last year on Bitcoin which betrayed a complete lack of technical understanding. It seems there are clear divisions within the sound money niche on […]

  4. BLOGDIAL » Blog Archive » Bitcoin and the generational divide Says:

    […] http://irdial.com/blogdial/?p=3103 […]

  5. Is GoldMoney A Gold-Backed Bitcoin? | Flyover-Press.com Says:

    […] except that GoldMoney is better because it is backed by gold. As has been aptly pointed out, Doug Casey is wrong on that issue. There is a huge difference. GoldMoney is not just a gold-backed Bitcoin. GoldMoney […]

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