News around this move by the finance minister of the tiny British crown dependency has a curious mix of definitions of the bitcoin, which soared to over $1200 today.
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.
It seems to be currency (it is backed by sterling), it is called a ‘commemorative coin’ by the mint, and if worse came to worse, could be melted down for the small amount of gold the coin itself contains. So it is currency, commemorative and gold rolled into one…what? Alderney to Manufacture Bitcoins The Financial Times Reports:
ALDERNY, LITTLE MORE THAN A ROCK
The virtual currencies suggest the possibility of a future in which networks of individuals can make transactions for their own interests, not beyond the reach of government scrutiny but beyond the reach of government manipulation.
Economist Pippa Malgren remarks: “Money becomes real when people have faith in it. Governments have no monopoly on that, which is why they spend a lot of time putting many symbols of faith and trust on the currency from pictures of sovereigns like the queen or the president to hidden symbols of power like pyramids and seals. They would not need to if it stood on its own. Faith can be earned and it can be lost. The problem with bitcoin is that people are afraid a power outage or a hacker or bad management could erode or destroy the value of a bitcoin. But, then again, governments are doing their best to erode confidence in fiat money, too.”