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The Race is on for a Gold Backed Bitcoin

Saturday, December 7, 2013 16:25

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(Before It's News)

TND Guest Contributor: Nathan McDonald, Sprott Money Blog |

Well that escalated quickly! In our last post, we discussed how the founder of e-gold was in talks to issue the first gold backed digital bitcoin style currency. It now appears that he isn’t the only one thinking about this.

According to the Financial Times, the UK Royal Mint has been in talks since this summer to issue its own physical gold bitcoins. The intention to make the physical coins with 500 pounds worth of gold. This would ensure that if the price of bitcoins were to collapse, then the gold coin itself would still hold its melt value.

The following was seen on the Financial Times:

The tiny Channel Island of Alderney is launching an audacious bid to become the first jurisdiction to mint physical bitcoins, amid a global race to capitalise on the booming virtual currency.

The three-mile long British crown dependency has been working on plans to issue physical bitcoins in partnership with the UK’s Royal Mint since the summer, according to documents seen by the Financial Times.

It wants to launch itself as the first international centre for bitcoin transactions by setting up a cluster of services that are compliant with anti-money laundering rules, including exchanges, payment services and a bitcoin storage vault.

This idea could become a Frankenstein of currencies if they also decide to stamp a face value on the coin, which is commonly done with coins issued by the Royal Mint. It would blend hard money, digital money and fiat money all into one messy basket.

The big story I see here is this. Bitcoin is being accepted by Western Central banks. If they are willing to take this step, then it much harder for the government to change stance and deem bitcoins an illegal form of transaction later on. This is a huge step forward, or back for bitcoin depending on your point of view.

No matter what your opinion is on this story, one thing is for certain: given all the hysteria and hype surrounding bitcoin, this is a great marketing idea for the UK Mint.

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Nathan McDonald writes for Sprott Money Blog, part of Sprott Money Ltd., a leading precious metals dealer selling gold coins, silver coins and bullion bars online and over the phone. As one of Canada’s largest owners of gold and silver bullion, the company’s goal is to facilitate ownership of precious metals no matter how big or small the portfolio.