UK Royal Mint Working On Plans To Issue Gold-Backed Physical Bitcoins

Tyler Durden's picture




 

The implicit, and ever more explicit, institutional acceptance of the dominant cryptocurrency Bitcoin (we say dominant because as we pointed out last week, there has been an unprecedented spike of digital currencies one can pick and choose from) continues when following the surge in vendors willing to transact in BTC over Thanksgiving, the latest news comes from the birthplace of the modern central bank, the UK, where we learn that none other than the UK Royal Mint has been working on plans since this summer to issue physical Bitcoins in collaboration with the Channel Island of Alderney.

But where the story gets downright surreal is that as the FT reports, the same symbolic Bitcoin token issued by the Royal Mint "would have a gold content – a figure of £500-worth has been proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency were to collapse." In brief: a perfect, and utterly incomprehensible, fusion of (opposing) hard, soft and digital currencies all rolled into one...

From the FT:

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.

So, convert a digital currency into fiat, issue plastic (or some other material) tokens (appropriately covered in some goldish color) representing "value" because suddenly the currency (supposedly) has the blessing of central banks, and then store them in some basement? Brilliant.

Just how is the UK Royal Mint involved?

The special Bitcoin would be part of the Royal Mint’s commemorative collection, which includes limited edition coins and stamps that are normally bought by collectors. It would have a gold content – a figure of £500-worth has been proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency were to collapse.

Wait, what: gold-backed Bitcoins? If so, that would be truly revolutionary because for the first time a Treasury (and by implication, a central bank) is effectively hinting that not only are they willing to fiat-ize Bitcoin, but also have the symbolic BTC token (after all Bitcoin is a digital currency by definition) serve as a commodity trap. Because once enough gold-backed physical Bitcoins are locked up in some basement in the UK, who has the master key? That's a rhetorical question by the way.

Naturally, the UK Mint is not quite eager to disclose full details while the plan is still being finalized:

David Janczewski, head of new business at the Royal Mint confirmed it had been approached by the finance minister of Alderney to “explore the possibility of manufacturing a physical commemorative coin with a Bitcoin theme”.

 

“Discussions have not progressed further and at this stage it remains nothing more than a concept,” he added.

 

But the controversy around Bitcoin has made the Alderney plan a sensitive subject. The Treasury, which owns the Royal Mint, declined to comment on the plans. George Osborne, the British chancellor, also holds the title of Master of the Mint.

Since there is understandably much confusion over what the minting process of a physical gold-backed token representing a digital currency, with the backing of an entity that does the bidding of an issuer that only believes in fiat currencies, here is the FT with the blow by blow.

An independent company will provide the Bitcoins. If the price plunged, neither Alderney nor the Royal Mint would lose anything.

 

The company would put the Bitcoins in an escrow account at an agreed price.

 

Meanwhile, the Royal Mint would take customers’ orders for its minted Bitcoins and receive money from those coin sales.

 

The virtual Bitcoins backing the physical coins would be held in digital storage facilities by Alderney.

 

The Mint would issue the commemorative Bitcoin, paying for the value of the gold content itself. Alderney would receive royalties from sales of the coins.

 

Coins could be redeemed for sterling at any point in Alderney for the price of a Bitcoin on that day.

All we can do at this point is sit back in wonder and amusement as we hit the pinnacle of monetary confusion, whereby the UK Royal Mint, willing to take full advantage of retail confusion, will mix hard, soft and digital currency, and produce a product... that is locked away on an island that belongs to the UK.

And all we can say is "brilliant", because if there is a better plan to meld the sentiment of both hard and digital-currency (and hence, anti-fiat) advocates, and to redirect it in a "fiat" pathway, we have yet to hear it.

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Sun, 12/01/2013 - 20:41 | 4204824 VD
VD's picture

whole point of BTC is that it's isnt chained to anything other than its crypto.

 

a whiff of CB desperation for sure.

Sun, 12/01/2013 - 20:43 | 4204828 fonestar
fonestar's picture

Desperation is right.

Backing = centralization.

Sun, 12/01/2013 - 20:45 | 4204830 VD
VD's picture

BTC is by default backed by its users and their code. they could buy gold with their BTCs specifically OUTSIDE the CB/gov that it is designed to circumnavigate. so another gov ploy to trick the sheeple.

Sun, 12/01/2013 - 20:45 | 4204834 fonestar
fonestar's picture

Correct.  It is funny to watch them in panic mode coming up with dumb and dumber contingency plans though.

Sun, 12/01/2013 - 20:53 | 4204866 kaiserhoff
kaiserhoff's picture

This piece is pure garbahje.  UK would never do it, and there is no need or possibility of linking any sovereign to bitcoin.  WTF?

Any small country in distress (Iceland, Ireland, Cypress...) could issue notes partially backed by sliver and run the table on the big boys, until the Marines arrived to render, ahem, assistance in regime change.

Sun, 12/01/2013 - 20:59 | 4204880 fonestar
fonestar's picture

Well they may not want to link to the mighty Bitcoin but at some point they will have to surrender to Bitcoin.

So this is your chance TPTB, surrender to fonestar.  I have a caboose out back we can formalize all of the paperwork.

Sun, 12/01/2013 - 21:01 | 4204891 Pladizow
Pladizow's picture

There's a sucker born every nano second!

Sun, 12/01/2013 - 21:38 | 4204995 Pinto Currency
Pinto Currency's picture

The commemorative Bitcoins are going to commemorate the death of the LBMA after being converted into a "physical gold market" that creates and trades infinite "physical" gold.

290 million oz. traded per day on the LBMA.  Quite an accomplishment. 

Now the Royal Mint is affiliating with Bitcoin.  That will really lend credibility to Bitcoin.  Cough.

The LBMA is dead!  Long live the LBMA!

 

Sun, 12/01/2013 - 22:02 | 4205128 ParkAveFlasher
ParkAveFlasher's picture

This isn't news.  The REAL news is that the Franklin Mint is issuing Elvis bitcoins plated in PURE 24k gold leaf, but for limited time only.  Call within the next 15 minutes and receive this free handsome display case with authentic serial number!

Sun, 12/01/2013 - 22:08 | 4205146 Pinto Currency
Pinto Currency's picture

 

The Royal Mint is issuing some new perfume called Eau de Skunke which they think will be a really big seller.

There will be a gold plated Royal Mint seal on the bottle.

Sun, 12/01/2013 - 22:11 | 4205165 clymer
clymer's picture

haha, please "fonestar", we're not as dumb as you look

As I said (so many time before, but first here: www.zerohedge.com/news/2013-05-12/visualizing-how-bitcoin-transaction-works

Look ZH, I love how BC uses 256bit PKI with salted hash to regulate and restrict the number of coins mined. I love how buyers and sellers can agree on it as a medium of exchange to work together without 3rd party interference. I get it. But here's the thing that prevents me from biting: it ain't backed by anything. And what the fuck is Keiser talking about when he says there will never be a competitor to bitcoin? Here's a novel idea: Anonymous puts a little time into understanding as much about banking and finance as they understand about scientology. As this understanding spreads between their more entrepreneurial members, say an offshoot, sub group that happens to work in certificate / key store management, they develop a similar algorithm, only they say, "look, we developed a similar model called 'crypto coin' won't just allow this to denominate in fiat that the 'cryptocoin' marketplace will back, we will tie specifically to gold and silver. The algo will ultimately mine 15x more silver colored cryptocoins than th gold colored ones, to represent what exists naturally in the crust of the earth. They then correspondingly create their own exchange (even say a virtual exchange represented by members), collectively owned by all cryptocoin holders. The balance of actual metal in the exchange is verified on a quarterly basis by the top 100 cryptocoin holders to verify that they maintain the same amount of precious metals in the exchange, as there exists cryptocoins in circulation. The crypto coins can then be redeemed in gold and / or silver. The same concept could be applied to oil contracts, shares in organic beef farms, or stock at company xyz. Till I see the next evolution cryptographic digital currency, I will keep hitting the coin shop and stacking. 

Intrinsic value is one thing. Tangible value is another. Combining the two is key

Observation: The bitcoin buyers / holders appear to be vitriolic toward those that prefer PM's. Understand that we are on the same side of this argument. Don't lose sight of the bigger picture; that we all now recognize how the monopolized private issuance of currency and credit has led us to this point

Sun, 12/01/2013 - 22:22 | 4205186 clymer
clymer's picture

To the rest of you, the only thing the UK royal mint is trying to do is the same thing that all money-sponging vampires try to do. This will bring a whole lot more people into the game. Metals will be re-introduced as money. From several different directions at once. Fonestar - one would think you'd be happy - you can keep your series of binary characters, or exchange them for ..money (?) geesh, think you'd be happy about bit coin finding a saviour out of all this hype..

Sun, 12/01/2013 - 22:38 | 4205269 mccoyspace
mccoyspace's picture

THey should just issue gold rounds with a bitcoin logo on one side and a naked woman on the other -- "Bits and Tits!"  Those things would just sell themselves.

Sun, 12/01/2013 - 23:52 | 4205515 Real Estate Geek
Real Estate Geek's picture

I'd buy that for a dollar!

Mon, 12/02/2013 - 01:42 | 4205716 Scarlett
Scarlett's picture

Unfortunately, it's impossible to back crypto with gold and/or silver WITHOUT COUNTERPARTY RISK.

Mon, 12/02/2013 - 03:32 | 4205804 i-dog
i-dog's picture

The future is digital ... Batcoin, Betcoin, Bitcoin, Botcoin, Buttcoin...etc. Not gold. Not gold backed. Just competing digital "coins" of a thousand flavours. There are currently hundreds of competing "old school" fiats. That's where digital will/must go. IMHO.

To THWART the globalists, we must not allow one iCoin to dominate, but let a thousand [peer-to-peer] flowers bloom (pardon the tulip pun!).

Mon, 12/02/2013 - 07:58 | 4206027 GetZeeGold
GetZeeGold's picture

 

 

 

 

Having gold backed bitcoins is like having an NSA tracking collar around your neck.

 

The best thing about gold is that it's anonymous.....which is why politicians hate it so much.

 

We don't except foolsgold around these parts....I don't care how you dress it up.

Mon, 12/02/2013 - 03:59 | 4205847 Mad Mohel
Mad Mohel's picture

Norhing is as good as gold, except gold(PERIOD)

Anything else is just someone trying to fuck you over(PERIOD)

Mon, 12/02/2013 - 05:26 | 4205916 PT
PT's picture

You guys are missing the important points:

Well that takes care of 21 million ounces of gold.

Does this mean that the price of gold will get pushed up to match bitcoin?
Or will bitcoin get pushed down to match gold?

Mon, 12/02/2013 - 06:54 | 4205987 PT
PT's picture

Will bitcoin get slammed down whenever gold gets slammed down?
Will the price of gold jump all over the place when bitcoin jumps all over the place? 

Mon, 12/02/2013 - 08:26 | 4206036 GetZeeGold
GetZeeGold's picture

 

 

 

 

Yeah....gold is pretty expensive to the Fed.

 

It sures costs them a lot of cash on a daily basis....but I'm glad they do it.

Mon, 12/02/2013 - 00:29 | 4205600 funthea
funthea's picture

Well, to be fair... that pic it fake.

Mon, 12/02/2013 - 01:25 | 4205685 Manthong
Manthong's picture

I'd be interested in that Elvis coin only if it had a solid 24 micron gold leaf of 100% pure alloyed gold.

Mon, 12/02/2013 - 02:29 | 4205772 fockewulf190
fockewulf190's picture

So, now you need a pick ax and a computer to mine the stuff.  Let me guess, Litecoin gets backed with silver, and CirclejerkCoin gets backed with palladium and Bitchcoin gets backed with platinum  and.....

Mon, 12/02/2013 - 06:43 | 4205976 samcontrol
samcontrol's picture

I am really confused here maybe you or someone can help me out.
If the world mints and printing vampires want to re introduce metals as money .. why are they selling it to the public at so low prices.... is it a question of timing?
When do metals come into play in the deflation then hyperinflation scenario. It is now a casino to me . I can,t get my hands on physical , so I bet on 1.2,4,5 at the table (silver miners) , and will continue to exchange my fiat for miners in fiat in the next ten years. If it doesn't work out i will lose a shit loads of shit fiat , if it works and my fiat versus bricks raises then I will get that million dollar beach house somewhere(right now it would be Quintana Roo, way south..... north of chile...way north.. or Uruguay ..right in the middle .. the problem ...in ten years they will be worth 2. But then miners can go up ferociously ,, see my confusion here?

Sun, 12/01/2013 - 23:42 | 4205490 fonestar
fonestar's picture

What does that prove?  Your link to the archive server?  Your ideas about "intrinsic" and "tangible" value are perhaps ideal for primitive society and that's about it.  Or perhaps if you believe in magical objects.  I like silver as an asset and for its properties but not because of anything intrinsic in the objective sense, the point that it is tangible and of limited supply is a bonus though.

Mon, 12/02/2013 - 01:14 | 4205672 Deo vindice
Deo vindice's picture

If you really want to operate apart from controls, simply use cash for all transactions, and store wealth in PMs.

Sometimes the simple concept is the best.

Cash for transactions. Gold / silver for wealth preservation.

What a novel idea!

Mon, 12/02/2013 - 01:26 | 4205689 fonestar
fonestar's picture

Cash for transactions?  Right, so drive up demand for dollars so they can be used against the PMs, smart move.  Again, the "metals only" crew is its own worst enemy.  Marching off to battle with helmets on backwards and barrels pointed at their heads.

Mon, 12/02/2013 - 01:36 | 4205708 aerojet
aerojet's picture

If you call within the next 30 minutes, you will also receive a free Civil War chess set at no extra charge! A $5000 value, yours to keep even if yo ureturn the Elvis Bitcoins!

Sun, 12/01/2013 - 22:14 | 4205134 nope-1004
nope-1004's picture

So what was your first clue that Bitcoin wasn't a centrally planned digital currency to begin with?

If you look at all the NSA evidence, combined with the fact that this is a 100% digital currency made by someone that can't be confirmed even exists, you can clearly see it has central planners all over it.  Now they want to try to control the digital currency by associating it with gold to give it some credence, and by golly, guess what.... the bitcoin logo just happens to be gold already, so the shoe fits!

Pure ponzi.  100% pure, suckers ponzi.  iTulip is more appropriate.

 

Sun, 12/01/2013 - 22:17 | 4205194 fonestar
fonestar's picture

There is no reason to believe any intelligence agency had a hand in the creation of Bitcoin.  Bitcoin is based on extant and time-tested technology.  Satoshi's genius was bringing it all together and solving double-spending.

More FUD please.....

Sun, 12/01/2013 - 22:40 | 4205222 clymer
clymer's picture

not that bright, kid. Please. Stop sucking pseudo-Satoshi's dick

Sun, 12/01/2013 - 23:08 | 4205369 fonestar
fonestar's picture

Provide me with any credible evidence of any intelligence agencies involvement in the creation of Bitcoin and I will reward you 1 BTC or 1oz gold maple (your choice).

I have spent countless hours reading such articles and videos and all I have come up with is a bunch of chinese whispers from people who don't sound like they have a freaking clue what they are talking about (Chris Duane cough, cough).

Sun, 12/01/2013 - 23:29 | 4205448 fonestar
fonestar's picture

Here's my offer.  So put up or shut up.

What?  No takers?

Mon, 12/02/2013 - 00:25 | 4205594 sixsigma cygnus...
sixsigma cygnusatratus's picture

Does the offer come with a free Sham Wow?  

Fact of the matter is that Bitcoin is no different than the free money scheme Charles Ponzi came up with in the 1920s, except this one is done with algos.  It will all end the same way.  Period.  

Mon, 12/02/2013 - 00:31 | 4205602 fonestar
fonestar's picture

Seriously, stop the deflection bullshit and show me evidence that Bitcoin was created by intelligence organizations.  I'm not asking about your equally asinine ideas about "ponzi schemes".

So put up or shut up and if you can't don't bother responding.

Mon, 12/02/2013 - 00:36 | 4205615 sixsigma cygnus...
sixsigma cygnusatratus's picture

Most people on this site don't give a flying crap about whether Bitcoin was created by some intelligence organization or not.  The point remains that Bitcoin requires more buyers everyday to sustain, and when that supply runs out, you will be selling your Bitcoins as souvenirs on ebay, along with Enron stock certificates.

Mon, 12/02/2013 - 00:46 | 4205629 fonestar
fonestar's picture

Bitcoin does not require more buyers everyday.  It could stay where it is currently in terms of adoption and continue to serve as a dollar proxy for the black market and those that want privacy.  All of your FUD is so easily dismissed it amuses fonestar.

Mon, 12/02/2013 - 01:04 | 4205663 sixsigma cygnus...
sixsigma cygnusatratus's picture

Black market already uses cash and bartering and is very private.  What the hell do they need Bitcoin for? But I can pretty much guarantee that when Bitcoin runs out of buyers, it's game over.

Mon, 12/02/2013 - 01:20 | 4205677 fonestar
fonestar's picture

If you can't figure that out I don't know what to tell you.  Why do you think Silk Road was doing so much business?  Obviously, Bitcoin is going to explode in black markets.

Mon, 12/02/2013 - 01:25 | 4205684 sixsigma cygnus...
sixsigma cygnusatratus's picture

Yeah, that worked out really well for Silk Road, didn't it...

Mon, 12/02/2013 - 01:27 | 4205690 fonestar
fonestar's picture

It did because it helped get press for the dark web and publicity for Bitcoin.  Plus it's back up and running.

Now do you have anything to offer in terms of information I was asking for?

Mon, 12/02/2013 - 01:43 | 4205717 sixsigma cygnus...
sixsigma cygnusatratus's picture

Yes. Find out who is behind:

eShekel, iShekel, Bitshekel, [insert cute name here]Coin, and all the other competing internet currencies and you will find the truth you are seeking.  But you ain't gonna like it.

Mon, 12/02/2013 - 01:47 | 4205722 fonestar
fonestar's picture

Thanks for proving my point!  You're a bunch of f*cking idiots.  If you lack facts you will just pull shit out of your big stupid (and very "tangible") asses!

Mon, 12/02/2013 - 01:50 | 4205729 sixsigma cygnus...
sixsigma cygnusatratus's picture

Keep trying to convince yourself that you're right.  Isn't that what this is really about?

Mon, 12/02/2013 - 01:56 | 4205736 fonestar
fonestar's picture

The markets are proving me right, I love it!  I can get wealthy for being right.  Bitcoin isn't rising because of imaginary "speculators" it's rising because it is spreading throughout some of the largest markets in Europe and Asia.

So go and throw a "gold-backed" party but don't be surprised when nobody comes.

Mon, 12/02/2013 - 02:05 | 4205746 sixsigma cygnus...
sixsigma cygnusatratus's picture

Toronto?  Isn't that in Canada?

Mon, 12/02/2013 - 04:40 | 4205887 tallystick
tallystick's picture

You can be behind your very own competing digital currency, just fork it.  https://github.com/bitcoin/bitcoin

Do NOT follow this link or you will be banned from the site!