A Closed Vault in (Otherwise) Open-Source Accounting is Just Silly

You may have heard of "gold-backed" cryptocurrency tokens. The businesses offering them claim to store precious metals in vaults which are always redeemable for the tokens. There's just one problem with this business model for anyone who favors sound money: it's banking.

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[RickHeil]

It's called banking! Well done Amanda!

[uvas]

Love your show, Amanda!

It's actually called fractional reserve banking. There have been some banks in history that kept their reserves at 100%, and they did quite well.

If the blockchain ledger is public, then at any time someone can compare the amount of tokens to the audited amount of gold held in the vaults. If the crypto company acts as a bailment company, then your gold would actually be really safe. International bailment laws are very strong.

[SinguSoon]

+TheDailyDecrypt - If the Yuan is, in fact, de-pegging from the dollar as of tomorrow, Tuesday, 4/19/16, the world of crypto-currencies are about to become hyper-active, and everyone, myself included, need to start zeroing on exactly what they want and need, and now, and this show is going a long way regarding assisting people in nailing down some specifics. Thanks and please keep it up!

[TomekSamcik]

Have we not forgotten to display our daily appreciation for the Decrypt to Amanda B. ? <3

[KingNuze]

Your always giving us the real.... Keep up the great work Amanda... #currencycompetition

[hamarana]

thanks Amanda ! :-) wonderful as always

[defipepe]

You take risk when you purchase cryptos by trusting the developers and their business model, and you take risk when you deposit your gold in a vault by trusting the owners and their business model. Hold your cryptos, hold your PMs and hold your cash

[DoYouWantTaBeFree]

I have been a BitGold customer for awhile. I have taken physical delivery of gold. Their gold is held by a third party (Brinks) and audited and insured by yet another party. I don't think they are a superior payment system, but I like owning physical gold. Some I have at my house, but I also like to have some "off site". BitGold gives me the ability to do this.

[guliper]

Great job guys, way to go!!!!
I love your channel.

Question: Which literature, or websites, or blogs or authors... you recommend for learning more about cryptocurrency?? (besides The Daily Decrypt ;)

[AndreiRailean]

Love your energy, Amanda. I think it'd be good for you to cover daily news on blockchains, etc. It seems like there's always something in the media about a bank or some other well-known entity exploring the blockchain. Just a thought - it'd prefer to hear it from you rather than scour the web to piece it all together.

[nuviber]

What does Joshua Scigala say about that?

[VentionMGTOW]

No doubt. When I hold metals I hold them myself. I'm a big fan of silver since it evens out the volatility of crypto.

[hoslo]

Thanks for the decrypt, Amanda. yah, Viva !
...I gotta go find a short vid on Yellen explaining her action at the fed, put it up against one of your vids, and send them both over to the plex so friends and family can make a judgement call on their options. :-) Best rc

[DaviddeKloet]

I think you just meant "open" and "closed" instead of "open source" and "closed source". Or what is the "source" you are talking about? Usually this refers to the "source code" of software.

[Douglasie]

Hi Amanda, the banks you refer to use fractional reserve banking (usually less than 10% reserve). Their fiatcurrency is backed by nothing more than the promise of the lenders to pay back the principal plus interest on all outstanding loans.
That's not exactly the same business model as 100% reserve, gold backed, quarterly audited tokens, is it?

I do believe these have their place in the currency competition.

Here's why: while I agree that gold backed
tokens do re-introduce the need to trust a third party, they might
have a characteristic that no other cryptocurrency offers: long-term
price stability. And no, I don't see that in crypto pegged to USD,
SDR, ... The USD for instance has lost 87% of its purchasing power
since 1964 and 96% since 1913. Pegging to fiat might offer short term
price stability, backing by gold (100% full reserve) will offer
long-term price stability. I do believe there are market participants
out there that look for that characteristic. Second, gold backed
tokens could bring a lot of new people into the crypto world. For
instance people that just don't trust 100% virtual currencies (yet).

[JeremySPeterson]

I'm curious if those bank "tokens" are redeemable based on an amount of gold, like by weight, or a certain dollar value...? Either way, the value of their token seems completely unstable. The value of both gold and traditional fiat currency fluctuate based on a variety of arbitrary things, right?

[davincij]

If the banker or gold holder would go to jail for life for not keeping 100% reserves then I think gold backed tokens could work but we all know bankers don't go to jail.

[aadeshabhang]

You just nailed it amanda
By the way i would like to know more about crypocurrency and its current progress in indian
such as 1 Where we can buy and sell ethereum in local without bank 2 Which is the best source to buy mining hardware in India.
I Hope u would make a great video on this request i have already seen u r previously videos and they r amazing.
This might be challenging a bit to gather more information about Indian and its Cryptocurrency progress.BUT i know u will make a great video for us

[davematherly]

I don't just like you and ... Patrick?... I FUCKING LOVE YOU TWO~~!!!
Youtube needs to add the "FUCKING LOVE" button next to the like button, "LIKE" it just isn't enough of a... button.

[cryptodummy]

Amanda, put me to thinking your video, have immediately removed my gold at Vaultoro.
Great channel with your as crypto Princess.