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414 sats \ 2 replies \ @jgbtc 23 Apr 2023
"We've got the gold, trust us. Here's another trillion tokens."
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30 sats \ 0 replies \ @KenyaCoin 23 Apr 2023
Exactly.
They don't have a large treasury of gold today. They receive a certain amount of gold from the exporters (the licit exporters,.. which are a minority of the gold producers in the country), but whether they will keep much of that is doubtful (as that gold they receive is what is sold to fund the government's spending. So while this token may have "backing" in gold, I very much doubt it will be full reserve.
Instead, this token is just that ... a representative token, i.e., it represents something instead of being the something itself. Just like stablecoins, where the value will hold only so far as you can trust the issuer. Same with NFTs.
This won't end well. The upside of holding the token is limited to gold's upside, and the downside is that it ends up being worth ~0. So there is essentially no reason to hold this token.
The article says this token will be "legal tender", and if that in fact occurs -- where this token is used for customer payments to merchants, or even person-to-person payments (like how mobile money can be used) then this could be something useful as an on-ramp into (and off-ramp from) bitcoin.
This token would need to be not easily reversible -- so knowing the details, which were not mentioned in the article, will need to occur before this token being beneficial to bitcoin can be ascertained.
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20 sats \ 0 replies \ @sandbeach123 23 Apr 2023
Exactly. "Trust me bro, this token is 100% backed by gold, no fake"
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0 sats \ 0 replies \ @KeynesianClowns 23 Apr 2023
Why should anyone trust any of these "gold-backed" digital currencies without an independent audit to make sure the gold is actually there? And this is before we even get into privacy and other usage concerns.
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0 sats \ 0 replies \ @gnilma 23 Apr 2023
Gold was tried and history shows that gold had failed. The physical nature of gold makes it unsuitable for today’s e-commerce / digital economy. As well, gold tends to centralize into big vaults (honey pots), again due to its physical nature and gold being costly/difficult to secure. Where there is centralization, government capture is always possible, and I would argue, probable.
Gold backed currency is even worse than using gold. We’re back where the government must be trusted; again, history shows that governments are not trustworthy. Gold backed or not, I believe the Zimbabweans were burned and rugged by their government enough times to never trust the government again. I believe this new gold backed currency will not gain wide adoption and will not end well.
Just my 2 sats. Keep working and keep it real.
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0 sats \ 0 replies \ @karanjbhatia 23 Apr 2023
Zimbabwe and currencies do not go well together
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0 sats \ 1 reply \ @faithandcredit 23 Apr 2023
Why dont they just use gold directly?
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0 sats \ 0 replies \ @sandbeach123 23 Apr 2023
Using pure gold is not practical, and using a degraded coin or gold alloy will fail eventually, because you need to trust the minters (government) to keep the gold % constant in the coins, and history shows that authorities have always failed on that task.
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0 sats \ 0 replies \ @siggy47 23 Apr 2023
I don't want to be cynical, but the people in power in Zimbabwe cannot be trusted to create a "gold backed" digital currency. This sounds like another opportunity to loot this country's valuable natural resources. They are better off listening to Anita Posch and using bitcoin.
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