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Rand Paul Suggests Backing Bitcoin With Stocks

Soulskill posted about 6 months ago | from the back-it-with-waffles-instead dept.

Bitcoin 404

SonicSpike writes: "In a recent interview, Senator Rand Paul said there's one thing he would change about Bitcoin: it should be backed by something with intrinsic value, like stocks. He said, 'I was looking more at it until that recent thing [sic]. 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 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.'"

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History (4, Funny)

recoiledsnake (879048) | about 6 months ago | (#46898225)

Those who fail to learn history are doomed to repeat it

Re:History (5, Insightful)

gl4ss (559668) | about 6 months ago | (#46898351)

I don't own bitcoin nor have I ever used bitcoin for anything.

but this Rand guy seriously misunderstands the whole fucking concept. stock? ? just sell your bitcoin and buy some stock with that money. if the stocks value was tied to bitcoin, you might just as well just own bitcoin instead of the stock. if the stock presented some other value(in dollars or bananas) that would be a direct tie in to something else.

backing it up with gold or other valuables or anything that would need some company to adhere to some arbitrary value for the bits would destroy the whole concept(or at the very least transform it to some airline miles system bs) and you might just as well dig egold out of the grave...

so what the guy would like would be a centrally deployed currency, you know, like bus card money. beats me why he thinks that would be better or more novel - of course then there would be a company to shut down to shut down the use.

Re:History (0)

rmdingler (1955220) | about 6 months ago | (#46898405)

This is just Rand Paul channeling Hank Johnson.

Look, Paul is not without some merit, especially in comparison to his Low-bar-setting peers,

but this is really indicative of how backwoods many of our older generation Congressmen are in regards to anything technology.

Re:History (4, Insightful)

i kan reed (749298) | about 6 months ago | (#46898771)

A. He's a senator.
B. He's younger than bill gates or steve jobs by almost a decade, and only a decade older than Sergey Brin and Larry page.

I think we can safely say every stupid thing comes from his brain rather than his generational cohort.

Re:History (2)

fuzzyfuzzyfungus (1223518) | about 6 months ago | (#46898825)

He doesn't just misunderstand bitcoin: Guy wants something 'tangible' so he picks stock... And stock in retailers? Those things that basically live and die by 'consumer confidence', which moves around according to some mixture of actual economic conditions and pure animal spirits.

Re:History (0, Insightful)

Anonymous Coward | about 6 months ago | (#46898813)

Idiot. He calls himself a Libertarian, someone who steers away from government regulators and towards competing private suppliers, and someone who embraces freedom.

Then he says the fiat currency issued and controlled by the U.S. Government that is backed by nothing is somehow O.K. while Bitcoin, a fiat currency backed by nothing but also free from government tyranny, needs some backing.

For this reason alone I will never vote for that ass clown.

it must be a bad idea then (1)

Anonymous Coward | about 6 months ago | (#46898235)

Rand Paul farting makes more logical sense than anything coming out of his mouth.

Breaking News: Rand Paul Invents... (5, Funny)

jeffb (2.718) (1189693) | about 6 months ago | (#46898243)

...the concept of the "mutual fund".

I can almost smell his clutch burning as he mentally shifts back and forth between "currency must be free of government intervention" and "currency must be backed by gold or silver"...

Re:Breaking News: Rand Paul Invents... (4, Insightful)

Anonymous Coward | about 6 months ago | (#46898321)

... and "colored coins"? Please correct me if I'm wrong.

Re:Breaking News: Rand Paul Invents... (4, Informative)

dmbasso (1052166) | about 6 months ago | (#46898767)

To whomever modded the AC troll: you're fucking ignorant.

Colored coins are a method to track the origin of bitcoins, so that a certain set of coins can be set aside and conserved, allowing a party to acknowledge them in various ways. Such coins can be used to represent arbitrary digital tokens, such as stocks, bonds, smart property and so on

Source [stackexchange.com] .

Really, if you don't know about the subject, what about you refrain from moderating?

Re:Breaking News: Rand Paul Invents... (1, Interesting)

Charliemopps (1157495) | about 6 months ago | (#46898355)

...the concept of the "mutual fund".

I can almost smell his clutch burning as he mentally shifts back and forth between "currency must be free of government intervention" and "currency must be backed by gold or silver"...

Another person that doesn't understand Libertarian ideals. What a surprise. Libertarians do not believe markets should be totally unregulated. What they do believe is that government regulation should have one goal, which is to increase transparency. Laws that require Credit Card companies to display their terms in clear, easy to understand ways for consumers are good laws in Libertarian eyes. Laws against insider trading, secret deals, etc... are all compatible. Where they draw the line is when the laws dictate prices or interest rates etc. Also, I don't think he thinks we should legally require that any currency be backed by Gold and Silver, he just thinks its a good idea. Whatever the standard US currency is should be backed by tangible assets but legally requiring such a system for a currency unregulated by the government like Bitcoin would not be Libertarian. That said, no one, not even Ron or Rand Paul, is 100% Libertarian. We all have our own ideas that are a mix of different political ideologies and there's nothing wrong with that.

Re:Breaking News: Rand Paul Invents... (5, Insightful)

blackraven14250 (902843) | about 6 months ago | (#46898385)

Libertarians do not believe markets should be totally unregulated. What they do believe is that government regulation should have one goal, which is to increase transparency.

Come on, don't make shit up. That's not the definition of libertarianism, and neither is it the goal of many libertarians.

Re:Breaking News: Rand Paul Invents... (4, Interesting)

Charliemopps (1157495) | about 6 months ago | (#46898491)

Sure there is. Granted, there's about a zillion forms of Libertarianism, just like everything else. But I'm talking about the currently popular version of it (the form I support), Noe-Classical Libertarianism that bases its economic policy on laissez-faire capitalism. The idea being that individual liberty is more important than most things. Government restrictions of business restrict the liberties of the owners of those businesses. That's why regulation is frowned upon. But whats frequently forgotten is that Libertarian ideals have a fundamental mistrust of both government AND business. Corporations tend to construct deals that mislead individuals and there-by restrict their liberties. Hence the desire for laws that increase transparency. Libertarians support laws that let individuals make informed decisions. They do not support laws that make it illegal for an individual to make a mistake and sign a terrible contract. They just want to ensure that the persons fully aware of what they are signing when they do so.

Remember, one of the largest groups at those "Occupy" rallies were Libertarians. I know it's hard to fit Libertarians into your black and white democrat/republican world view, but the fact is most libertarians are more socially liberal than most democrats... an more fiscally conservative than most republicans. I've been a libertarian since the early 90s and I have to say it's been an honor being hated by both political parties all this time.

Re:Breaking News: Rand Paul Invents... (0, Insightful)

Anonymous Coward | about 6 months ago | (#46898661)

Libertarians inevitably support the 'freedom' to pollute and exploit my environment without consequences. Because government regulation is bad.
If someone threatens my air/water supply, I should be at liberty to kill them.

Re:Breaking News: Rand Paul Invents... (0)

Anonymous Coward | about 6 months ago | (#46898857)

Libertarians inevitably support the 'freedom' to pollute and exploit my environment without consequences. Because government regulation is bad. If someone threatens my air/water supply, I should be at liberty to kill them.

You have been seriously misinformed.

Re:Breaking News: Rand Paul Invents... (2)

perpenso (1613749) | about 6 months ago | (#46898837)

Libertarians do not believe markets should be totally unregulated. What they do believe is that government regulation should have one goal, which is to increase transparency.

Come on, don't make shit up. That's not the definition of libertarianism, and neither is it the goal of many libertarians.

Actually the GP is correct. Most libertarians believe that government should provide basic services (police, fire, military, etc) and provide regulations that create a level playing field. They believe in minimalist government, not no government. Transparency would be a major component of a level playing field.

Re:Breaking News: Rand Paul Invents... (2)

jythie (914043) | about 6 months ago | (#46898415)

This is only the case for certain values of 'libertarian'. Like any large group, the ideals are rather fluid and tend to be more flavor then specification.

Re:Breaking News: Rand Paul Invents... (0, Troll)

Anonymous Coward | about 6 months ago | (#46898501)

Yeah. Libertarians are all for transparency, until big gov'ment enforces transparency, and then... MAH FREEDOMS!!1!
You're a bunch of entitled assholes, who've never known injustice or poverty, who 'chose' your parents wisely. You were born on third base, and think you hit a triple.

Re:Breaking News: Rand Paul Invents... (4, Insightful)

Dragonslicer (991472) | about 6 months ago | (#46898591)

In other words, Libertarians believe that the government should only have "enough" regulation. Guess what, that's what almost everyone believes. There's just disagreement on the definition of "enough".

Re:Breaking News: Rand Paul Invents... (0)

Anonymous Coward | about 6 months ago | (#46898613)

I'm sure he really believes that's what Libertarians think, even though it's what *he* thinks, and he falsely asserts the authority to speak for all Libertarians on matters in which they uniformly disagree with him. Libertarians, however, ARE on record in saying repeatedly that "survival of the fittest" is the single most important law of business economics. Thus Libertarians were in favor of the collapse of Lehman Brothers and by extension The Meltdown and The Great Recession. It should be gratingly obvious to all what kind of deep thinkers are those who assert the primacy of their abstract philosophy over trivial practicalities like the collapse of the entire global economy and impoverishment of every single living human being. The Libertarian Battle Cry is "Bring Back The Great Depression!"

Hayek, right. King-sized hypocrite (1)

Anonymous Coward | about 6 months ago | (#46898575)

Pegging a currency to a basket of commodities is not the worst idea Hayek ever had. But the guy pontificated about small government and anti-socialism ferociously until Daddy Koch talked him into moving to the U.S. to take advantage of medicare for his serious ailments. Self-serving double-talking soulless punks the lot of them.

Re:Breaking News: Rand Paul Invents... (1)

ripvlan (2609033) | about 6 months ago | (#46898663)

Wait - stocks have real value?!

Re:Breaking News: Rand Paul Invents... (2)

dmbasso (1052166) | about 6 months ago | (#46898829)

Yep, they are worth at least the value of the company's assets minus liabilities. Market pressures can make the stock price lower than that value... might be a good opportunity to buy.

'Real' money uhu (1)

Anonymous Coward | about 6 months ago | (#46898251)

Like 'real' money is backed up by anything.

Re:'Real' money uhu (1)

Chrisq (894406) | about 6 months ago | (#46898515)

Like 'real' money is backed up by anything.

British bank notes have a recursive backup. It says on them "“I promise to pay the bearer on demand the sum of ” then the amount, e.g. "..five pounds".

(Though this is pointless today it did mean something when the currency was backed by gold)

Re:'Real' money uhu (1)

beelsebob (529313) | about 6 months ago | (#46898783)

Well, it's not recursive, it's just multi layered. British bank notes are not money. They are IOUs. The promise on them is a promise to give the owner of the note some coins. The coins themselves used to be backed by gold, the notes did not. Recursion would imply that the BoE could pay the IOU written on the bank note using other bank notes, which they can't.

Re:'Real' money uhu (0)

Anonymous Coward | about 6 months ago | (#46898535)

It's backed up by the wealthiest government on Earth. What could possibly be a stronger backing? It's certainly stronger than gold (backed up by... being a good conductor? Kay Jewellers ads?).

Stocks? (2, Insightful)

KermodeBear (738243) | about 6 months ago | (#46898253)

something with intrinsic value, like stocks

Stocks have no more intrinsic value than our paper currency.

Re:Stocks? (0)

Anonymous Coward | about 6 months ago | (#46898285)

his hair piece is on too tight.

Re:Stocks? (5, Informative)

Eunuchswear (210685) | about 6 months ago | (#46898313)

Nothing has "intrinsic value". Stuff is worth stuff to people depending on what they are prepared to pay for it.

Re:Stocks? (1)

CanHasDIY (1672858) | about 6 months ago | (#46898383)

Nothing has "intrinsic value".

Other than fresh water, oxygen, shelter, and sustenance, anyway.

Re:Stocks? (4, Insightful)

CreatureComfort (741652) | about 6 months ago | (#46898469)

Um...those don't have "intrinsic value" either. That's not to say that they aren't valuable or necessary, but you'll find the value of ice in January in Siberia is very much different than the value of the same ice in Arizona in June. So while each of the things you list may have values at a certain times and places, it is still entirely "subjective" value.

Re:Stocks? (0)

Anonymous Coward | about 6 months ago | (#46898603)

People seem to discuss based on different definitions of intrinsic value, and be unaware that there are multiple quite different definitions. Fx you could rightly claim that happiness has intrinsic value (see the ethics-definition in link below) http://en.wikipedia.org/wiki/I... [wikipedia.org]

Violence. (5, Interesting)

Ihlosi (895663) | about 6 months ago | (#46898493)

Other than fresh water, oxygen, shelter, and sustenance, anyway.

Violence (and any means increasing the potential violence an actor has at his disposal) has intrinsic value.

In fact, in any system with potentially malicious actors, a currency must be backed by some degree of violence. Otherwise, the malicious actor can just take the currency by force (if he considers it valuable).

Wrong (0)

Anonymous Coward | about 6 months ago | (#46898347)

I'm guessing you're the type of person who would argue that intrinsic value "doesn't exist". Am I right?

As for backing bitcoin with stocks, that would make bitcoin nothing more than a stock mutual fund, which there are already thousands to choose from.

Re:Stocks? (2)

davek (18465) | about 6 months ago | (#46898379)

something with intrinsic value, like stocks

Stocks have no more intrinsic value than our paper currency.

Incorrect. If I buy a share in PepsiCo, I then receive a tiny fraction of the profit of EVERY single Pepsi sold on earth. That's work. That's economic production. The share has "intrinsic value" because it gives me access to their profits. This is also why, at it's core, the stock market is not a casino (although government regulation and crony capitalism make stock purchases much more like a "bet").

I think the whole crypto currency thing will evolve into more of a stock market type of thing, with companies running their own block chains as a way of selling shares.

Re:Stocks? (1)

Anonymous Coward | about 6 months ago | (#46898443)

Not all stocks pay dividends. In fact, most don't. Most are only worth whatever the next guy will pay for it. The majority of the stock market is, in fact, like a casino.

Re:Stocks? (1)

Anonymous Coward | about 6 months ago | (#46898525)

Not all stocks pay dividends. In fact, most don't. Most are only worth whatever the next guy will pay for it. The majority of the stock market is, in fact, like a casino.

Not quite, if you - or together with a majority of shareholders who agree with you - have enough stock in a company, you can actively influence how the company is run, including forcing it to pay you dividends, or sell the company and cash out, etc. Showing that stocks has a real value, as representing actual ownership share of actual real world assets. That is a principle very different from the casino principle, even if many speculative or small-time investors don't focus on it.

Re:Stocks? (1)

Anonymous Coward | about 6 months ago | (#46898461)

You do?

No, you might receive a dividend but that is determined entirely by Pepsi. They are under no obligation to give you a dividend. You have no access to their profits, you are not entitled to a portion of their profits, they are free to never send shareholders a single penny of their profits.

Shares of stock are only worth what someone else is willing to pay you for them. In that respect, no different than Bitcoin or a bag of rocks.

Re:Stocks? (0)

Anonymous Coward | about 6 months ago | (#46898463)

If I buy a share in PepsiCo, I then receive a tiny fraction of the profit of EVERY single Pepsi sold on earth.

I don't believe PepsiCo, or any other company, is actually obligated to pay any dividends. (Apple famously does not....)
If you don't get dividends, then you are not receiving any part of the profit. You are merely hoping that those profits will convince other people that your share of the company is more valuable.

Re:Stocks? (2)

tendrousbeastie (961038) | about 6 months ago | (#46898819)

Only if the company chooses to pay a dividend, which is by no means certain.

Re:Stocks? (1)

Assmasher (456699) | about 6 months ago | (#46898467)

This is what makes what he was saying seem actually 'crazy'... He doesn't seem to understand how the stock market works at its most absolute basic level (much less dark pool arbitrage.)

Scary, because when you listen to him he tends to seem much smarter than the average congressman (certainly a backhanded compliment if ever there was one...)

Re:Stocks? (1)

Jeff Flanagan (2981883) | about 6 months ago | (#46898611)

>Scary, because when you listen to him he tends to seem much smarter than the average congressman

Maybe if you only let him run his mouth for a minute or two. Give him 5 minutes, and he'll say something crazy every time. The nut didn't fall far from the tree.

Re:Stocks? (1)

Dragonslicer (991472) | about 6 months ago | (#46898641)

I'm surprised that I haven't yet seen that oft-(ab)used quote, even though it fits perfectly here.

"Intrinsic": I do not think it means what he thinks it means.

Owning a stock means you own part of a company (1)

Z8 (1602647) | about 6 months ago | (#46898667)

Stocks have no more intrinsic value than our paper currency.

A stock means that you own part of a company. The company itself may own land, computers, factories, etc. (It could even own guns and gold! yeehaw!) Those have intrinsic value, so the stock does also.

This is why stocks are recommended for people concerned about inflation. A fall in the value of paper money typically does not affect stocks as much as most other instruments.

Re:Stocks? (1)

Dr.Dubious DDQ (11968) | about 6 months ago | (#46898839)

I still want a pork-belly-backed currency.

But Rand, stocks don't have real value! (3, Insightful)

Anonymous Coward | about 6 months ago | (#46898261)

At least ones that don't pay dividends.

Re:But Rand, stocks don't have real value! (0)

Anonymous Coward | about 6 months ago | (#46898505)

What's the intrinsic value of a stock that does pay a dividend, or at least one that paid a dividend last quarter but is under no obligation to pay dividends in the future?

Huh? (4, Interesting)

nine-times (778537) | about 6 months ago | (#46898263)

Can someone explain how this isn't silly? He wants it backed by intrinsic value, which I think may be missing the point of Bitcoin, and his example of the perfect thing with intrinsic value is "stocks"?

I'm sure this guy has some fans who can explain why this makes sense, but it just seems like more evidence that he's completely out of touch and doesn't know what he's talking about.

Re:Huh? (1)

Greyfox (87712) | about 6 months ago | (#46898479)

Why should bitcoin have any more or less value than our paper currency? US Dollars are only worth what people think they are, and have a whole lot less effort put into their design than bitcoin does.

Re:Huh? (2)

tendrousbeastie (961038) | about 6 months ago | (#46898859)

The only difference being that the US Gov will only accept taxes in US dollars, which means that along with being worth what people think they are worth, they are also worth your tax liability.

Bitcoin is only worth what people trading it think it is worth.

Re:Huh? (0)

Anonymous Coward | about 6 months ago | (#46898483)

"'completely out of touch and doesn't know what he's talking about"

That's one way to put it, rather negatively.

As a fan, I would say: He just doesn't get bitcoin.

He also has an issue with US currency not being backed by anything since Nixon. While we get why they unhooked the currency from gold and silver, we wish there hadn't had been a need to do it (and way too late to fix that now).

But there's no need to be mean.

Re:Huh? (1)

Anonymous Coward | about 6 months ago | (#46898665)

Or that you don't understand what stocks are.

Stocks are partial ownership of a company. That company has assets. The stock has intrinsic value in that the company could be liquidated and sell off it's assets to pay the stock holders. It's not a fixed value, or a set amount of something, like backing it with x weight in y precious metal, so prices will fluctuate more, but that's why he suggested aggregation to stabilize the price a bit.

I think it would be interesting to see a digital currency backed by something. I'm not married to the idea that a private currency (such as the current *coin set) needs to be. Problem with backing something on the *coin system is you have to either pre-mine the coins, or accept that you're giving away free backing to people who mine. Maybe don't back *coin like this, maybe there's another crypto-currency sytem that would better support it.

Nice bit of dismissal there at the end though. If anyone does come forward to explain what you asked for, you can dismiss them as 'just a fan' regardless of the merits of their post.

Re:Huh? (3, Insightful)

Trepidity (597) | about 6 months ago | (#46898747)

In a kind of theoretical sense that's true, but in practice the ownership theory of stock value only is really workable for large stockholders, who could actually force decisions to be made, such as selling off assets. If you own 100 shares of Google, you do have a claim on Google's assets if it's ever liquidated, but you have no ability to force the liquidation. Your theoretical claim may therefore be indefinitely deferred (even for a century or more), which greatly reduces its present value as a tangible commodity with intrinsic value.

For the foreseeable future, the only real value of Google shares that you can actually realize is the market value, i.e. what someone else is willing to pay for the stock. Apart from selling the stock on the stock market, for whatever someone is willing to pay you, there is really no practical way to turn 100 Google shares into anything else of value. So I view them as having mainly market value, with a weak, distant connection to something of intrinsic value.

It makes sense to me (1)

Z8 (1602647) | about 6 months ago | (#46898741)

Can someone explain how this isn't silly? He wants it backed by intrinsic value, which I think may be missing the point of Bitcoin, and his example of the perfect thing with intrinsic value is "stocks"?

Stocks do have intrinsic value because owning a stock is equivalent to owning a company, and all the company owns (factories, farmland, guns, whatever). Bitcoin, on the other hand, has no intrinsic value.

Partly because of this, stocks are also much less volatile than bitcoin and are better at being a store of value. For instance, compare this recent bitcoin chart [bitcoincharts.com] with this S&P500 chart over the same period [google.com] . As you can see, the difference between the min and max stock is about 4%, while bitcoin is about 40%. That's 10x worse.

Is there a way of transferring stock (for instance an S&P500 ETF) as easily as bitcoins can be transferred? I don't know, but it would be very cool, and definitely much better than Bitcoin. So anyway, his idea is probably unworkable, but it's not silly or ridiculous IMHO.

Re:Huh? (0)

bill_mcgonigle (4333) | about 6 months ago | (#46898821)

Forest/trees.

I don't think he's right on the best way to back a digital currency. However, here we have a US Senator talking about a digital currency, if he was setting up a digital currency, etc.

Currently any competition in currency is illegal. We have a 99.5% win here and people are yelling about how it's shit.

Go ask Harry Reid about setting up a competitive market of currencies and see how well you do. I would buy some of Paul's silly currency just to back him on the effort.

Bad idea, backed by something is bitcoin death... (1)

JcMorin (930466) | about 6 months ago | (#46898265)

The second your backed by something, there is an authority. Gold? Who own/store the gold, what if the gold get stolen or seize? Backed by stocks? Who own the stocks, on what market? What about stock owning regulation? No! The idea is to having something you can trade without the paperwork, anywhere to anywhere for anything, from a phone instantly & borderless. If you like a backed currency, try your own and let the Bitcoin experient goes... time will tell!

Re:Bad idea, backed by something is bitcoin death. (2)

jimbolauski (882977) | about 6 months ago | (#46898559)

Every trade done with Bitcoins has a publicly available paper trail as the transfer of the Bitcoin must be public otherwise you could just copy your coin and respend it.

What the hell? (2)

B33rNinj4 (666756) | about 6 months ago | (#46898269)

Is he really that stupid?

Re:What the hell? (0, Funny)

Anonymous Coward | about 6 months ago | (#46898315)

he's in a top US political position, was your question rhetorical?

Re:What the hell? (2)

Eunuchswear (210685) | about 6 months ago | (#46898323)

Yes.

Next question?

Re:What the hell? (5, Insightful)

jythie (914043) | about 6 months ago | (#46898439)

The better question is, are his supporters stupid? Generally one does not get to be that powerful by being stupid, while we mock them politicians are usually quite intelligent, but that tends to be hidden behind closed doors. What the public generally sees is a carefully crafted image designed to appeal to certain voter blocks, a persona if you like. Ran Paul's stupidity is just a role he plays based off analysis of people who vote for him.

Problem... (4, Insightful)

MickyTheIdiot (1032226) | about 6 months ago | (#46898277)

The problem is that this is a classic "inside the corporate bubble" reaction to bitcoin. One of the supposed ideas of bitcoin is to not link money to governments. Since corporations are super-important to mindless bots like Rand Paul, the solution is, of course, to link them to corporations. If there is anything worse than linking the monetary system to governments, if you would be linking them the corporations that even worse about selfishness and tilting the playing field towards themselves at all costs.

So Rand Paul doesn't understand Bitcoin (0)

Anonymous Coward | about 6 months ago | (#46898305)

Anybody else you want to add to the list?

Backwards (1)

BlueMonk (101716) | about 6 months ago | (#46898319)

Bitcoin has more intrinsic value than stocks because because it's a limited resource whereas stocks can split and reverse split and are available at the whim of the company offering them. The Bitcoin supply is less volatile. The demand may be volatile, but the supply is quite predictable. Trying to back bitcoin with stocks and peg it to something sounds like nonsense to me. How do you peg something that's already pegged to a pre-determined supply. Bitcoin is every bit as "pegged" as gold as far as I can see.

Re:Backwards (0)

Anonymous Coward | about 6 months ago | (#46898749)

"Bitcoin has more intrinsic value than stocks because because it's a limited resource ... "

Hahaha. Yeah. Mathematical hashes are more valuable than physical commodities. Can't wait to trade magic beans for food or oil.
What fucking world do you live in? When did you last leave your Mom's basement?

If you take financial advice from Rand Paul... (0)

Peter Simpson (112887) | about 6 months ago | (#46898327)

...you get what you deserve. Actually, you sould probably remove the word "financial" from the previous sentence.

it renders bitcoin purposeless. (4, Interesting)

nimbius (983462) | about 6 months ago | (#46898357)

People forget that bitcoin became popular during the advent of wikileaks, lulsec and the activism of Aaron Schwartz. Tying bitcoin to an exchange means the minute you start a website that publishes sensitive government secrets like warrantless wiretapping, Anone who feels compelled to help your efforts is just as vulnerable to government detention and surveillance as you. The point of bitcoin, dogecoin, and other cryptocurrency is to prevent the government from quietly telling banks to refuse your transactions on the basis of your dissent, and ferrying you off to some resort in cuba for waterboarding and lemon pepper fish.

And unrelated: Bitcoin is dead, for all intents and purposes. a combination of shit-tier security and unaccountable exchanges made it what it is today. switch to doge or something else, keep your wallet encrypted, and make frequent withdrawals.

Re:it renders bitcoin purposeless. (0)

Anonymous Coward | about 6 months ago | (#46898737)

And unrelated: Bitcoin is dead, for all intents and purposes. a combination of shit-tier security and unaccountable exchanges made it what it is today. switch to doge or something else, keep your wallet encrypted, and make frequent withdrawals.

Dogecoin's security is just as bad as Bitcoin's, the exchanges are even worse, and its money supply went from fixed to infinite this year.

Amm (0)

Anonymous Coward | about 6 months ago | (#46898359)

I'm sure this guy has some fans who can explain why this makes sense, but it just seems like more evidence that he's completely out of touch and doesn't know what he's talking about.

- [zfa.co]

Intrinsic value (0)

Anonymous Coward | about 6 months ago | (#46898373)

Value is not intrinsic in anything. Gold only mattered for thousands of years because it was rare enough and took enough work to extract and process that the poors couldnt just go get a bunch. it was a good representation of wealth. a ring or necklace made of gold is worth more than one made of dried feces because we subjectively attached a value to gold that is higher than that of shit. now, gold is used in all kinds of things that technology has allowed us to make (from medical devices, to the pins on RAM, etc) so it has more utility now, but not any more actual "intrinsic" value. carbon conducts electricity just as well, and if graphene interconnects or some metamaterial can replace gold in all the utility type applications, gold will have less of this "intrinsic" (ie: utility based) value than before. after all, carbon is made in stars, gold is only made in supernovae, and is far less abundant. But more to the point, stocks are peoples faith in a company, like enron or facebook during their IPO, or the thousands of failed companies whose stock prices fell through the floor. DANGER WILL ROBINSON. MY VALUATION IS FLAILING WILDLY

Bitcoin technology (1)

Ken Broadfoot (3675) | about 6 months ago | (#46898375)

Looks like as far as Rand is concerned, the technology of Bitcoin has been accepted... double spend problems etc... now he is worried about 'intrinsic value'.
While tying it to stocks is only one idea, tying it to something 'may' reduce volatility in pricing... but what?

I like Bitcoin as it is. But a second new coin tied to 'something' could be an interesting spin-off... The new IPO coins are usually tied to Bitcoins themselves...

I always wanted to do a 'Just-Dice' investment coin. Your coin purchase becomes a 'Just-Dice' investment account. The coins behave like any other coin but as 'Just-Dice' investment increases in value so do your coins... strangely this is STILL tied to Bitcoin. They all are really.

Intrinsic value? (0)

Anonymous Coward | about 6 months ago | (#46898393)

Why should BitCoin be better than the US Dollar? I remember when a dollar bill was labelled "Silver Certificate". That went away when the dollar was allowed to float.

And both quarters were made of something other than coated base metal.

Sure... (2)

koan (80826) | about 6 months ago | (#46898395)

Maybe something proven like mortgage-backed securities (MBS) and collateralized debt obligations (CDO) then we can all don our black tennis shoes and board the mother ship.

Quite possibly exactly wrong (2, Interesting)

Anonymous Coward | about 6 months ago | (#46898397)

Bitcoin is a joke at this point and trying to fix it with anything risks the anything, but even if it wasn't, Rand Paul may be completely, diametrically wrong with this idea. I found this article to be well worth a read, almost ten years ago:

http://mises.org/daily/1595

Good fun read, but it takes on the nearest equivalent economic situation involving a currency under siege.

Impressed (1)

Archwyrm (670653) | about 6 months ago | (#46898411)

I was impressed that he used the word 'permutation'. That made what he said not quite entirely pointless (but still close).

Uhhhhm, yeah . . . (1)

Kimomaru (2579489) | about 6 months ago | (#46898429)

Why does this sound like an absolutely horrible idea? It feels like the same thinking that went into creating CDOs.

Re:Uhhhhm, yeah . . . (1)

wasabu (1502975) | about 6 months ago | (#46898489)

Perhaps he's smarter than he's putting forth here. By generating support, even it if is for a flawed model, it will put wind behind cryptocurrency sails in general - stripping power from central bankers.

Re:Uhhhhm, yeah . . . (1)

Kimomaru (2579489) | about 6 months ago | (#46898683)

I was talking to a Quant the other day and he was telling me that a company he's doing work for is evaluating Bitcoin for its transactions with other companies. As a Quant, he viewed using Bitcoin as having a certain risk that people have to evaluate for themselves. In other words, he viewed it in mathematical and risk terms. The problem is, there's more to risk than models and math (the collapse of LTCM being a notable example http://en.wikipedia.org/wiki/L... [wikipedia.org] ). I view the creation of CDOs as wishful thinking that was backed up by math and reasoning that would never stand up if looked at from a rational point of view. Cryptocurrency isn't backed by anything, so they shouldn't be used for anything serious. There's a place for it, but not for anything serious like Rand Paul is suggesting.

Re:Uhhhhm, yeah . . . (1)

wasabu (1502975) | about 6 months ago | (#46898817)

That argument is identical to those made when the horseless carriage first appeared, women threatened to join the workplace and The Interwebz rev0luti0n warz :)

Re:Uhhhhm, yeah . . . (1)

wasabu (1502975) | about 6 months ago | (#46898831)

Plus, windows was a piece of shit for years that you would never use in a commercial environment. Now, um... whoops, bad example.

And what makes him think... (1)

Simon Brooke (45012) | about 6 months ago | (#46898437)

... that stocks have any intrinsic value?

Re:And what makes him think... (1)

TheDarkMaster (1292526) | about 6 months ago | (#46898639)

Well, stocks have value, they say you now own a small part of the company in proportion to the value written on the paper. The only problem on this is if the written value (price you want to sell) actually matches the real value (price that others are willing to pay).

WAT (1)

Anonymous Coward | about 6 months ago | (#46898441)

Wait, stock has intrinsic value? Can I eat it?

Genius (1)

benjfowler (239527) | about 6 months ago | (#46898447)

Given how QE has pumped up asset prices, backing e-currency with stocks is little better than fait.

I suggest backing Bitcoin with dog shit. At least it's worth something -- at worst, you can compost dog shit and use it to grow things, unlike electronically-traded (and soon to be worthless) stocks.

Stocks are worthess? (0)

Anonymous Coward | about 6 months ago | (#46898521)

If you really believe that, would you please cash out your 401K and sign over the check to me. Thanks.

This maybe good news ! (1)

jmd (14060) | about 6 months ago | (#46898457)

The more people like Rand Paul show they do not understand BTC the more likely BTC will be a success. :)

Intrinsic Value (1)

wasabu (1502975) | about 6 months ago | (#46898471)

BitCoin's intrinsic value is a massive groundswell of anti-authoritarianism.

News flash (1)

operagost (62405) | about 6 months ago | (#46898481)

A senator said something dumb. If this frightens you, then please don't look up what your Vice President has said over the past few months. You will need new underwear. Not to mention another senator from Nevada calling his own citizens "domestic terrorists" for basically trespassing. Where was was he during Occupy Wall Street, when people were trespassing AND vandalizing? Oh yeah-- lauding those people.

My consolation is that this is probably the most awkward thing you'll hear out of Paul. I'm pretty sure I know what he meant, but it still doesn't make sense. Any non-government currency is naturally fiat or nearly so. When US currency wasn't circulating during the Civil War, private companies minted tokens. Usually, the tokens only contained metals worth a fraction of their face value.

Re:News flash (1)

clay_shooter (1680300) | about 6 months ago | (#46898549)

Not to mention another senator from Nevada calling his own citizens "domestic terrorists" for basically trespassing.

You're talking about the situation where government agents backed down from confronting a person who was trespassing and stealing government resources and his armed thug friends? They backed down because of a fear of violence not because they revised their policies. The senator was right.

Not stocks (1)

PhilHibbs (4537) | about 6 months ago | (#46898517)

I'd back it up with the rack, or the guillotine.

Stocks have no intrinsic value, you idiot. (1)

EmagGeek (574360) | about 6 months ago | (#46898551)

Rand Paul is really proving just what an imbecile he is. Stocks are just pieces of paper that say you own 1/Nth of a company that may or may not be worth anything.

Simple question... (0)

Anonymous Coward | about 6 months ago | (#46898581)

How much debt did Rand Paul start out with in student loans? Free ride? Daddy paid? Genuinely curious.

Cluelessness on full display. (1, Interesting)

140Mandak262Jamuna (970587) | about 6 months ago | (#46898585)

He thinks bitcoin is something like a fiat currency, backed up by something. He does not realize, bitcoin is simply a public, open digest of transactions, sort of like a public bank ledger.

The best way to describe bitcoin in the stocks world is like the thirdparty stock registrars. Most people do not take possession of stock certificates or even bond certificates when they buy those instruments. Typically a thirdparty company maintains a register where it takes "possession" of the stocks on your behalf, and "delivers" them to the buyer when you sell them. Often your buyer and seller also would a member of the same registrar and so all that happens is your account is debited or credited with so many shares of such and such a company for every transaction. Mutual funds are required by law to keep the instruments they own with a registrar. It is even possible for you to exit a mutual fund by taking your share of the stocks and bonds instead of cash. To avoid triggering taxes, people could take the distribution in "kind" and move them to their name, probably under the same registrar.

So imagine having a completely open registrar, all the transactions are completely transparent and multiple parties verify and tally the ledger and confirm the final balances of all the members, that is bitcoin. Bank ledger keeps dollar amounts for each account. Stock registrar maintain multiple stock/bond shares for each account/member.

Bitcoins should be backed by tulips (0)

Anonymous Coward | about 6 months ago | (#46898615)

Tulips do have intrinsic value. In fact quite few are blooming in my yard right now. How many currencies can do that? They are biologically fixed to bloom only once per year which increases scarcity. The government is unable to produce tulips that are in bloom year round which would greatly reduce the value of the tulip. Also the government suddenly can't just quadruple the number of new tulips created one month in response to a crisis. You can only cultivate them at a certain rate, thus they are a natural hedge against hyperinflation.

Caca on Chrome? (1)

Kevoco (64263) | about 6 months ago | (#46898729)

Rand seems to be completely out of touch

Stocks have value? (0)

Anonymous Coward | about 6 months ago | (#46898739)

Stocks don't have intrinsic value - they're worth what people are willing to pay, no more and no less. You might as well back BitCoin with LiteCoin.

Let's tie you to that block of concrete. (0)

Anonymous Coward | about 6 months ago | (#46898795)

In case the bridge you were sold in Brooklyn goes down, you'll have something to keep you afloat.

Stocks have no value.... (1)

Lumpy (12016) | about 6 months ago | (#46898797)

I cant trade them in for pieces of the company, they are as worthless as the paper they are printed on. Want proof? See what happened to all the money people had in stocks during the last crash. Hell I have framed on my wall a Certificate for Pan American Airlines Stock that is 100% worthless.

You want your currency to actually have worth, you back it with Gold.

Rand Paul - Next Great Idea? (1)

mrbene (1380531) | about 6 months ago | (#46898809)

Dear Rand Paul,

Maybe we should back gold with a basket of stocks too?

Thanks.

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