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Rand Paul Suggests Backing Bitcoin With Stocks

Posted by Soulskill on from the back-it-with-waffles-instead dept.

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.'"

34 of 404 comments (clear)

  1. History by recoiledsnake · · Score: 4, Funny

    Those who fail to learn history are doomed to repeat it

    --
    This space for rent.
    1. Re:History by gl4ss · · Score: 5, Insightful

      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.

      --
      world was created 5 seconds before this post as it is.
    2. Re:History by i+kan+reed · · Score: 4, Insightful

      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.

    3. Re:History by PopeRatzo · · Score: 5, Insightful

      This is just Rand Paul channeling Hank Johnson.

      Seriously, it's more like Rand Paul channeling Peter Griffin.

      "Lois, I just spent all our savings on lotto tickets!"

      --
      You are welcome on my lawn.
    4. Re:History by guru42101 · · Score: 4, Informative

      He's also a failed optometrist.

    5. Re:History by funwithBSD · · Score: 5, Funny

      Must be, if he did not see this coming.

      --
      Never answer an anonymous letter. - Yogi Berra
    6. Re:History by gorzek · · Score: 3, Insightful

      Anyone can be "principled." Whether those principles make sense or are sane in any way is the tricky part.

      --
      Check out my world simulator thingy.
    7. Re:History by BasilBrush · · Score: 4, Informative

      I think you're confusing him with his father Ron Paul. They're both wacko libertarians. But the son is rather less intelligent than the father.

    8. Re:History by cusco · · Score: 3, Insightful

      He's a failed something anyway, if he thinks that stocks have "intrinsic value".

      --
      "Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
    9. Re:History by lgw · · Score: 4, Insightful

      He's a failed something anyway, if he thinks that stocks have "intrinsic value".

      Stocks are the only thing with intrinsic value: ownership of the means of production. Everything else is convention, but the ability to make something that someone else wants or needs is intrinsic value.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    10. Re:History by Anonymous Coward · · Score: 3, Interesting

      Im just downvoting everyone who criticized Rand Paul on the "intrinsic value" thing, because he didnt say that. That was inserted by the submitter / editors, presumably to attract this sort of criticism from people who didnt read the article.

      Thanks for contributing, tho!

  2. Breaking News: Rand Paul Invents... by jeffb+(2.718) · · Score: 5, Funny

    ...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"...

    1. Re:Breaking News: Rand Paul Invents... by Anonymous Coward · · Score: 4, Insightful

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

    2. Re:Breaking News: Rand Paul Invents... by blackraven14250 · · Score: 5, Insightful

      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.

    3. Re:Breaking News: Rand Paul Invents... by Charliemopps · · Score: 4, Interesting

      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.

    4. Re:Breaking News: Rand Paul Invents... by Dragonslicer · · Score: 4, Insightful

      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".

    5. Re:Breaking News: Rand Paul Invents... by dmbasso · · Score: 4, Informative

      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.

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

      --
      `echo $[0x853204FA81]|tr 0-9 ionbsdeaml`@gmail.com
    6. Re:Breaking News: Rand Paul Invents... by Bob9113 · · Score: 5, Insightful

      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.

      Gold has no more intrinsic value than Bitcoin. The physical demand for gold as a conductor, plating material, and for jewelry is a tiny fraction of the amount we pull out of the ground. Its value is entirely backed by its rareness, which is exactly the same as Bitcoin.

      The next bit is a little harder to grasp, but I promise you it is worth your time to seriously reflect on: The value of gold is subject to extreme fluctuations (look at the past 30 years). That means if you peg your currency to it, your currency will fluctuate in value. Fluctuations in the value of a currecy make it less reliable as a temporary store of wealth. That, in turn, increases the friction on trade in that currency. Pegging the dollar to gold would make the US less productive internally because of reduced consumer confidence, and encourage the world to shift away from using the dollar as the dominant currency for international trade.

      --
      Stop-Prism.org: Opt Out of Surveillance
    7. Re:Breaking News: Rand Paul Invents... by Xaedalus · · Score: 3, Insightful

      Problem is, libertarianism suffers from a No True Scotsman fallacy, promulgated by corporatists who use libertarian creeds to advance the supremacy of corporations (and therefore wealthy rent seekers who want to firmly establish a caste-based society), and in doing so undermine the entire philosophy. Just like most any other philosophy, really. Every system is perfect, until free will is introduced.

      --
      Here's to hot beer, cold women, and Glaswegian kisses for all.
    8. Re:Breaking News: Rand Paul Invents... by thoth · · Score: 3, Informative

      Another person that doesn't understand Libertarian ideals.

      To be fair, that's because the definition of Libertarianism changes depending on who you ask. As the old joke about economists goes, ask 10 Libertarians what Libertarianism is and you'll get 20 answers.

      The one I've heard most often is basically the radical capitalism version from David Friedman, in his book The Machinery of Freedom. If you somehow have superior credentials to Mr. Friedman, well I'd ask what the hell you are doing arguing on Slashdot among many other things.

      Anyway, that version is all about a tiny government and replacing more services formerly provided by the government with competition, typically competing corporations. Through the magic of competition, according to him, all that other stuff just sorts out, since if you aren't happy with service X provided by contractor/corporation Y, then seek another bid/payment for services more to your liking. Fire protection, hospitals, national defense, schools, groceries, legal system, etc. all with no regulation or oversight, entirely existing on their reputations in the free market, competing with one another for your business with enlightened self-interest as the check.

      Of course, this is totally unworkable in the real world and he admits as much in the closing chapters. Things like how impossible it would be to build national infrastructure without the eminent domain powers of government (e.g. somebody's property is getting "stolen" against their will), how lawsuit happy such a society would be (to people who counter that whatever contract you sign is binding... right, that's why ALL contracts in the business world are NEVER disputed, right?).

      All your other variations seem like Libertarians realizing the pure form is BS and theoretical only.

  3. But Rand, stocks don't have real value! by Anonymous Coward · · Score: 3, Insightful

    At least ones that don't pay dividends.

  4. Huh? by nine-times · · Score: 4, Interesting

    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.

    1. Re:Huh? by Trepidity · · Score: 3, Insightful

      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.

      --
      10 PRINT CHR$(205.5+RND(1)); : GOTO 10
    2. Re:Huh? by fermion · · Score: 4, Insightful

      It makes sense in a world where one assigns values corporations and does not believe in the US. This comes from the same place that the gold standard comes from. In the world as it currently exists, the United States is a meaningful and important place made up of people who select a governement. As an expression of our value, faith, and worth we put out a currency. The currency reflects the innovation of our country by expanding as the capacity of our country expands. In fact the currency expands a bit faster which puts a pressure on the people of the country to innovate, and a negative incentive to save excessively, but rather to invest in innovation. OTOH, as stated, the gold standard ties a country to existing resources. There is an existing amount of gold, and short of governement regulation to set the value, does not reflect the innovation of a country. The gold standard insures that those with resources, in this case gold, are always going to better of than those who merely can innovate. Likewise, the Bitcoin is independent of incumbent forces and is free to increase and decrease in value based on those who value it. By backing it with incumbent retailers, you are limiting it the values of existing commodities, rather than seeing growth in future innovation. This is very bad because future innovation almost guarantees that the value of incumbent retailers will fall, in the same way that Walmart almost put Kmart and Sears out of busines. I do give him credit for trying to slip this by using stocks, which at least appreciate in value with innovation, instead of Gold like his father would have. The Gold Standard people just want to have King George come in a steal our stuff again.

      --
      "She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
  5. Problem... by MickyTheIdiot · · Score: 4, Insightful

    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.

    1. Re:Problem... by pla · · Score: 3, Insightful

      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.

      As the bigger problem here, Paul's solution to this "problem" would effectively allow third parties to create equity in a company out of thin air. Something tells me Walmart/IBM/whomever wouldn't take kindly to every Bitcoin miner on the planet diluting their stock value.

      This would only work if it functioned essentially like corporate scrip, where Walmart alone could create Bitcoins, and they could then give customers their change in BTC. Even then, they probably wouldn't want to do so, because again, it directly dilutes their stock - Or put another way, it makes "giving change" roughly equivalent to paying a microdividend (albeit in the form of a liability whose value they have some influence over, equity in themselves).

  6. Re:Stocks? by Eunuchswear · · Score: 5, Informative

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

    --
    Watch this Heartland Institute video
  7. it renders bitcoin purposeless. by nimbius · · Score: 4, Interesting

    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.

    --
    Good people go to bed earlier.
  8. Re:What the hell? by jythie · · Score: 5, Insightful

    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.

  9. Re:Stocks? by CreatureComfort · · Score: 4, Insightful

    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.

    --
    "Unheard of means only it's undreamed of yet,
    Impossible means not yet done." ~~ Julia Ecklar
  10. Violence. by Ihlosi · · Score: 5, Interesting
    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).

  11. Re:'Real' money uhu by ciderbrew · · Score: 4, Insightful

    Real money is backed by ..... A HUGE ARMY!

  12. Re:Stocks? by drinkypoo · · Score: 3, Informative

    Precise value can be subjective, but things which are useful just because they're there have intrinsic value, even if it isn't very much. So says my dictionary.

    --
    "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
  13. quantum libertarian by globaljustin · · Score: 3, Interesting

    I won't discount that there may have been some libertarians at Occupy rallies

    yeah, at Occupy Portland it was a group of 4-5 poly-sci majors dressed in business clothes walking around with "Ron Paul 2012" signs

    see, "what is a libertarian?"

    then it's chaos...

    there are popular definitions, dictionary definitions, academic definitions...then the interest groups who use wedge issues that link certain policies to "libertarian" in popular media...arg!!

    chaos! a full-on linguistic apocalypse

    so then, it becomes a nothing word...sort of like a quantum particle in a state of quantum flux...Schodinger's Libertarian if you will

    it's not until the "libertarian" is forced to **define policies they support** that we open up the system and see if the Cat is really a democrat or republican or just ignorant of how the government works in general

    --
    Thank you Dave Raggett