Quote from: pening on December 25, 2013, 09:03:04 PM

Quote from: jaked on December 25, 2013, 07:31:00 PM

Quote from: CryptoPhilanthropist on December 25, 2013, 05:25:01 AM

I foresee a collapse of BTC value when the first large financial institutions release cryptocurrencies of their own, which are actually backed by tangible assets like gold or by fiat currencies.

What do you mean by "backed"?
Backing a virtual currency by a physical commodity implicitly means that the "backer" has the power to generate coins as he wishes.
Cryptocurrencies don't need any tangible backing, as they're backed by mathematics.

Sure, financial & political institution will try to ride Bitcoin's success, and create their own versions of "crypto" "currencies", but it won't be nor "crypto" nor "currencies".
As soon as people understand the difference between trust and proof, they'll say goodbye to the fiat schemes.

If institution X created a cryptographically secured proxy for gold, $, wheat futures or whatever, and its widely available and accepted, its a cryptocurrency. Thats the OP's premise, that the primary advantage of Bitcoin is the secure, trusted, transfer of funds. Now, many would not agree this is the only purpose and say there are alot of other reasons, but its a fair point it is one of the major advantages. Take that advantage and replicate it in to some thing that is trusted and easy to access/obtain/reimburse etc and you have something which will possibly have larger mainstream acceptance than Bitcoin. A large amount of the value is based on speculation that Bitcoin is destined to become common use and therefore highly valuable (due to limited supply) and you lose that speculative value if a common replacement is in use.

How can an algorithmic artifact be a proxy for physical gold?
Someone has to update the network manually on the amount of gold in existence, since the digital network can't figure it itself.

This means: trust.

Trust & cryptocurrencies don't mix.