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In a newly-published interview with Fortune’s Tory Newmyer, Rand Paul (R-Kentucky) says that there’s a key element missing from bitcoin: the fact that it isn’t backed by something else that holds value.
In this particular case, Paul — the son of Ron Paul — thinks bitcoin should be backed by stocks. Here’s what he said when Newmyer asked him whether or not his campaign was looking into accepting contributions in the form of the digital currency:
[blockquote style=”2″]And actually my theory, if I were setting it up, I’d make it exchangeable for stock. And then it’d have real value. And I’d have it pegged, and I’d have a basket of 10 big retailers. Because I read [Marc] Andreessen’s article a couple months ago. What fascinated me about it was those 2 to 3% margins. If you multiply that out for all of Wal-Mart and they don’t have to use Visa anymore, I’m guessing the people who have to be worried here are Visa and MasterCard. I think it would work, but I think, because I’m sort of a believer in currency having value, if you’re going to create a currency, have it backed up by — you know, Hayek used to talk about a basket of commodities? You could have a basket of stocks, and have some exchangeability, because it’s hard for people like me who are a bit tangible. But you could have an average of stocks, I’m wondering if that’s the next permutation.[/blockquote]
Paul likes the idea of bitcoin in principal, which is no surprise as he follows the Austrian school of economic thought.
But could Paul’s plan be one worth looking into? Many in the community would argue that bitcoin, in its current form, is just fine.
What do you think about Rand Paul’s thoughts on the matter? Does he make a point at all or do you think it’s nonsense?
[textmarker color=”C24000″]Source/Via[/textmarker] Fortune / Business Insider [textmarker color=”C24000″]Image[/textmarker] Gage Skidmore
Milly Bitcoin 
Alien 
You cannot have a decentralized currency “backed” by something because some entity would need to control the assets. This shows a lack of understanding of what Bitcoin is.
You can, in a way. You can tie Bitcoin, or another digital currency public ledger based system to the ownership of something else. If tied to a stock, then you basically have created digital bearer shares.
Then it is not decentralized because the stock is tied to a business entity.
You misunderstand what decentralized means. The network that verifies the transactions, and confirms that the stock is valid, is decentralized. It does not matter if the stock itself is.
A system can be decentralized and still interact with any other system without causing centralization. In fact, if a company decides to tie their stock to Bitcoin, or any other decentralized digital currency, then they will lose all control over that stock. It will truly become it’s own entity.
The ownership verification would be decentralized but the currency itself would be centralized because it depends on some asset controlled by some entity somewhere. Company stock cannot be decentralized because they can go out of business at any time, issue more stock, etc.
That is what a colored coin is. People are already developing have developed systems to do just this. That is the beautiful thing about digital currencies…if one person wants to use the system to have coins that are tied to stock, then they can. If someone wants to create a coin that is completely premined, and uses PoS with 1000% interest daily, they can (not many people will use it, and the numbers will be crazy). Or, if someone decides to build a system that lets users use the block chain to verify inputs outputs within a separate system that is built on top of their currency, or even build new currencies on top of it, they can do that too (Ethereum).
The idea behind digital currency, which is verifying information on a decentralized, distributed network, has unlimited uses. It is a revolution.
Makes no sense whatsoever. What is the advantage for a company to issue stock as an anonymous digital currency? None. What is the advantage to owning a stock in an altcoin instead on an established trading platform? None. Why would you go through a mining process if you are going to back up your digital coins with a stock? How would you pick the stocks that back up the coin? Why would anyone back up a currency with actual businesses? Evidently bitcoin has enough of a libertarian feel to it that he is for it, even though he has no clue how it works.