Gold-Backed Debit Card

[helmuth_hubener]

Would any of you be interested in using a gold-backed debit card?

That is, you'd have an account of gold. You would own the gold, not dollars. Upon swiping the card to pay for your meal or shopping or whatever (or having it auto-debited to pay for rent or electricity) dollars would be transferred to the merchant, as normal. It would seem just like a normal transaction to them. The card would be accepted everywhere Visa is accepted.

The gold-to-dollar conversion would be automatic behind the scenes, taken care of by the card so you don't have to do anything.

Would you use such a thing? Would you prefer to keep your money in gold rather than a bank account denominated in dollars?

I'd love to hear any thoughts and opinions. I'd use it but only if it had such-and-such? Needs this feature or that? Stupid idea? I want to know!

[P3ter_Griffin]

Put me down as 'would use' . You didn't describe how you'd ascertain the gold to US dollar conversion, so I'm assuming you'd use the futures price. I think that is a faulty price, because individuals with open contracts on expiration date do not have to complete their side of the contract, sellers don't have to posses or have the means to posses the gold they are 'selling', and buyers don't have to accept delivery of gold they are 'buying'. So I would yearn for better price discovery, if that is in fact how you'd get pricing.

[helmuth_hubener]

Cool, thanks, Peter.

It would be the current spot price, not the futures price. This is widely available everywhere, like so:



This may not be the perfect price, but it is the price that one can buy and sell gold for on the world market. Would you want the debit card to convert at a higher gold price, or lower? Or, different in some other way that you might be able to explain? I just am not sure what you're envisioning.

[presence]

This concept is already available in bitcoin.

[presence]

Would you want the debit card to convert at a higher gold price, or lower? Or, different in some other way that you might be able to explain? I just am not sure what you're envisioning.

spot price can swing wildly; often something such as 1h hl/2 or 1h hlc/3 is used; or 2 hour moving average etc.

[helmuth_hubener]

Whoops, I don't think gold is at $38,000/oz just yet today. I guess that is not a live link. How about this instead:

[NoOneButPaul]

This concept is already available in bitcoin.

Too bad Bitcoin has no tangible value.

Ever since I heard David Morgan talk about this idea (Apparently this debit card system is how people use Gold and Silver as money in Utah where it's recognized as legal tender) I knew it was the wave of the future to bringing down the dollar system.

GoldMoney also recently went full on into BitGold which is apparently trying to combine the ease of using bitcoins while actually having a valuable backing to it.

Getting gold and silver electronic, and NOT ALLOWING ANYONE to fractionally reserve the physical, is the best chance we have at exiting the system.

You can completely destroy a government if you figure out a real way to transact outside of it.

[helmuth_hubener]

This concept is already available in bitcoin.

Really? Where? There are bitcoin cards, kind of, couple guys in Canada as I recall for one, but no Visa (nor any other common card) card that one could pay for things in dollars and yet have the balance denominated in bitcoin. That's that I knew of. Things are rapidly evolving in the bitcoin world.

[helmuth_hubener]

spot price can swing wildly; often something such as 1h hl/2 or 1h hlc/3 is used;

Often used where, by whom?

[NoOneButPaul]

spot price can swing wildly; often something such as 1h hl/2 or 1h hlc/3 is used; or 2 hour moving average etc.

The exact same thing can be said about bitcoin and people are using it and accepting it just fine.

Bitcoin has given us the blueprint to the future (open source, p2p, etc.) but the coin itself is worthless. When people figure out a way to incorporate bitcoin's foundations into gold and silver the world is never going to be the same.

[P3ter_Griffin]

Cool, thanks, Peter.

It would be the current spot price, not the futures price. This is widely available everywhere, like so:



This may not be the perfect price, but it is the price that one can buy and sell gold for on the world market. Would you want the debit card to convert at a higher gold price, or lower? Or, different in some other way that you might be able to explain? I just am not sure what you're envisioning.

I am unsure how spot price is figured. I believe it starts with the 'gold fix' a couple of times a day, but then is it actual transactions where gold and dollars are changing hands that are reflected in the price movements? I'm unsure, I'd have to read about it a bit more.

I don't have any desire for specific US denominated gold prices, I just think there would be better price discovery if both parties were actually interested in completing the transaction. This may very well be the case with spot price though, and either way isn't a reflection on a 'gold backed debit card', just what tools you'd have available for the conversion rate.

[helmuth_hubener]

GoldMoney also recently went full on into BitGold

WOW! Thanks for this news! I had not heard at all! GoldMoney was purchased by BitGold. There are no remaining DGC (digital gold currency) news outlets really remaining, at least not active, so not too surprising I hadn't heard. Didn't even know a deal was being considered. Anyway, that is very interesting.

NoOneButPaul, would you want a gold-backed debit card? Would you use it as your main account, or just for novelty? Or not interested at all?

[presence]

Often used where, by whom?

I deal with bitcoin a lot; an example there is coinbase, prior to being an exchange, they allowed you to buy or sell bitcoin at an "average" price.


https://support.coinbase.com/custome...ther-websites-

Seeing as you're not operating an "exchange" spot price really isn't what you're after. You're offering banking services; similar to what coinbase was prior to becoming an exchange.

bitpay is another example of a derived price is a similar business environment to what you're proposing:

https://bitpay.com/bitcoin-exchange-rates#bbb

BitPay consolidates market depth from multiple exchanges to provide buyers with a Bitcoin Best Bid (BBB) exchange rate. We currently calculate the BBB based on bitcoin/US Dollar rates because of maximum liquidity.
To calculate the exchange rate for US Dollars, we pull the market depth from exchanges with adequate liquidity and withdrawal capability in USA and the Eurozone. The exchange order books are merged into a Consolidated Level II table.
Exchange rates for non-USD currencies are provided by the Open Exchange Rates API at the time the invoice is generated.
The BBB is calculated by simulating an auto-routing market sell order, across all exchanges, with zero commission fees. Buyers will always get a better value by spending their bitcoins at a BitPay merchant than by selling them on an exchange.

Here's an example of a company that already offers gold backed debit cards (not offering service to US residents):

http://www.safehaven.com/article/245...-gold-standard

It is always converted at the daily exchange rates.

So they're converting at "daily close"

Spot prices are continually changing -- they fluctuate according to varying supply and demand. To mitigate the risk of continuously changing prices, investors created derivatives. Derivatives such as forwards, futures and options allow buyers and sellers to "lock in" the price at which they buy or sell an asset in the future. Locking in prices with derivatives is one of the most common ways investors reduce risk.

http://www.investinganswers.com/fina...pot-price-2007



so

"spot" speaks in terms of settling at a specific point of time in the future; we'll settle this at the end of the day closing price; we'll settle this at the "last" price at the time you click "buy".

This can be very dangerous because price may only be at "spot" for a brief moment; it has the potential to be an outlier and leave you liable. Perhaps only 2 grams of gold actually sold at a peak spot price.... but your customer makes a million dollar purchase with their debit card at that flashing moment when price is really high.

You wouldn't want to be liable for a financial condition that lasted a split second; it would be much more prudent to price in terms of a moving average.

[presence]

The exact same thing can be said about bitcoin and people are using it and accepting it just fine.

Bitcoin has given us the blueprint to the future (open source, p2p, etc.) but the coin itself is worthless. When people figure out a way to incorporate bitcoin's foundations into gold and silver the world is never going to be the same.

yes but that's peer to peer via exchange pricing.


He's talking about being an 3rd party intermediary between gold and dollars; making payments in dollars on behalf of deposits held in gold. Its impossible to liquidate real time at spot price. Spot price reflects the price of the last transaction not the next.

[presence]

This concept is already available in bitcoin.

I'm not sure what your options are in the US; but the EU is loaded with options

bitpay, xapo, coinkite, anxbitcoin, etc.


https://bitcointalk.org/index.php?topic=1001849.0

[helmuth_hubener]

I deal with bitcoin a lot; an example there is coinbase, prior to being an exchange, they allowed you to buy or sell bitcoin at an "average" price.

Gotcha. Thanks. My concept is a little different.

[helmuth_hubener]

I'm not sure what your options are in the US; but the EU is loaded with options

bitpay, xapo, coinkite, anxbitcoin, etc.


https://bitcointalk.org/index.php?topic=1001849.0

Awesome, thank you so much, presence! Yeah, I'm out of it. Those look like some solid options. Here they are:



Presence, what if there were a card like that with no ordering fee, monthly fee, no transaction fee, and free global ATM withdrawals?

And what if you could choose to have it backed by gold or bitcoin, or whatever mix of both you wish?

Would you personally be interested in using it?

[presence]

Presence, what if there were a card like that with

no ordering fee, monthly fee, no transaction fee, and free global ATM withdrawals?

And what if you could choose to have it backed by gold or bitcoin, or whatever mix of both you wish?

Would you personally be interested in using it?

One time when I was a little kid my uncle asked me what kind of ice cream I wanted; strawberry? chocolate? vanilla? mint chip? I was excited. Then he told me he was $#@!ing with me and didn't have any icecream.

[heavenlyboy34]

Too bad Bitcoin has no tangible value.

Ever since I heard David Morgan talk about this idea (Apparently this debit card system is how people use Gold and Silver as money in Utah where it's recognized as legal tender) I knew it was the wave of the future to bringing down the dollar system.

GoldMoney also recently went full on into BitGold which is apparently trying to combine the ease of using bitcoins while actually having a valuable backing to it.

Getting gold and silver electronic, and NOT ALLOWING ANYONE to fractionally reserve the physical, is the best chance we have at exiting the system.

You can completely destroy a government if you figure out a real way to transact outside of it.

Nothing has tangible value (or "intrinsic" value). All value is subjective. Austrian econ FTW.

[heavenlyboy34]

btw, WRT OP, I'd use a 100% gold card. I imagine whoever creates such a thing would also devise a way to instantly convert FRNs via some device to gold so's to calculate prices in real time.

[helmuth_hubener]

One time when I was a little kid my uncle asked me what kind of ice cream I wanted; strawberry? chocolate? vanilla? mint chip? I was excited. Then he told me he was messing with me and didn't have any icecream.

LOL, this answer is sufficient. Assuming you like ice cream. There's going to be a catch, maybe more than one catch, but what I'm thinking of is doable. I'm just gauging interest. Doesn't seem like a lot.

Then again, RPF may be kind of dead.

Is there a bitcoin venue that would be more informative to gauge the actual interest level that you'd recommend? Do you think that a very large number of bitcoin people are interested in gold, or more of a fringe, rare thing?

[presence]

You might want to talk to the people from amagi metals about where they market, etc.

[osan]

When people figure out a way to incorporate bitcoin's foundations into gold and silver the world is never going to be the same.

In principle, this is not a difficult thing. If gold and silver become the global standard for money and is honestly and transparently administered (good luck on that last bit), then whatever the official global monetary pool of gold and silver might at a given time would represent the total number of bitcoins floating about. The ratio gives you the value of gold in terms of bitcoins and bitcoins in terms of gold.

One question in my mind is whether the "official" global monetary gold stock should be held constant the way the number of bitcoins is supposed to.

[osan]

One time when I was a little kid my uncle asked me what kind of ice cream I wanted; strawberry? chocolate? vanilla? mint chip? I was excited. Then he told me he was $#@!ing with me and didn't have any icecream.

And you've hated him ever since?

[presence]

And you've hated him ever since?

No we're good now... he comes to my house from time to time... Whenever he shows up, I offer Jack, Crown, Patron, Grey Goose... whatever he wants.

[muh_roads]

Too bad Bitcoin has no tangible value.

Ever since I heard David Morgan talk about this idea (Apparently this debit card system is how people use Gold and Silver as money in Utah where it's recognized as legal tender) I knew it was the wave of the future to bringing down the dollar system.

GoldMoney also recently went full on into BitGold which is apparently trying to combine the ease of using bitcoins while actually having a valuable backing to it.

Getting gold and silver electronic, and NOT ALLOWING ANYONE to fractionally reserve the physical, is the best chance we have at exiting the system.

You can completely destroy a government if you figure out a real way to transact outside of it.

You are talking about the Byzantine Generals' problem. https://en.wikipedia.org/wiki/Two_Generals%27_Problem

This has already been solved with bitcoin. Math is the backing and it shouldn't be downplayed. Not just the limited supply but more importantly it's the revolutionary breakthrough of solving the double-spend problem.

Adding gold to bitcoin introduces counterparty risk. Counterparty risk is a very important concept that shouldn't be ignored. It's no different than keeping bitcoins on an exchange. You have to trust someone else.

BTW bitgold doesn't use bitcoin as its payment rail. You can buy into bitgold with btc but they are not the same. It is a very centralized system that isn't available to many countries, including the US.

[helmuth_hubener]

btw, WRT OP, I'd use a 100% gold card.

HB, would you use a 90% one?

That is one of the "catches" I was mentioning to presence. It turns out having a card denominated and backed 90% in gold is a ton easier than having one backed 100% by gold. Would this be a deal-breaker for you? Or would you still consider it worthwhile to have your main financial account be (e.g.) $9,000 in gold and $1,000 in US dollars?

How about the rest of you?

[heavenlyboy34]

HB, would you use a 90% one?

That is one of the "catches" I was mentioning to presence. It turns out having a card denominated and backed 90% in gold is a ton easier than having one backed 100% by gold. Would this be a deal-breaker for you? Or would you still consider it worthwhile to have your main financial account be (e.g.) $9,000 in gold and $1,000 in US dollars?

How about the rest of you?

Actually, I don't see that as a problem. As it is, I don't have access to 100% of my checking or savings FRNs at any given time (Checking is ~96%, IDR savings ATM).
I reckon if even just 90% is gold, the purchasing power and stability long term would make up for it. Agreed?

[helmuth_hubener]

Bump.

[Krugminator2]

I'll take the unpopular view and say I would not. For one thing, the dollar has been very stable especially since the early 80's. Secondly, when people talk about the dollar losing 96% of its value since the creation of the Fed that doesn't mean someone who held dollars would lose 96% of their purchasing power by holding cash. For the majority of that time you could hold dollars in an interest bearing or treasuries that would roughly keep pace with inflation.

And why link the account the gold? Why not to equities? Equities went up, I think a million percent in the 1900's. The best book making the case is Triumph of the Optimists. It looks at the stock performance of every global index since their inception. Equities do very well in countries with inflation deflation credit defaults, etc. I also agree with this article that rips into Justin Amash which makes points that are somewhat related to why you might bring up the idea of a gold checking account. http://www.forbes.com/sites/johntamn...-libertarians/