Re: backing?

[doug@netcom.com (Doug Merritt)]

tcmay@netcom.com (Timothy C. May) said:
>* The role of *gold* is tangential and secondary. Any stable currency
>would suffice, and in fact gold bullion would be no more desirable
>than yen or Deutschmarks.

You are a modern person in this thinking. Not all are. The uncoupling of
the U.S. dollar from a government-specified gold standard in the 1970's
is *still* a controversial issue with some people (not all of whom are
idiots, by the way, although I personally with disagree with 95% of them).

It is practically a truism that bull markets bring out modern thinking
about currency and that bear markets bring out gold-standard thinking
about currency.

Low-margin speculators regularly make money by predicting that kind of
psychological reaction alone. (The "low-margin" qualifier is a short-hand
to say that "no, *you* can't count on making money that way." :-) I assume
that some will disagree that *anyone* makes money that way, but that's not
really my point.

My point is, for digital currency, it makes sense to model non-digital
forms. There will be times that people feel insecure and believe (for
whatever reason) that gold-backed digital currency is the way to go.

Other people in other times won't be interested in gold-backed digital
currency, and that brings up different algorithms.

The psychology of the market (past, present and future) seems to me to
say that one shouldn't consider algorithms of only one form.

Anyone for digital currency mutual funds? :-)
	Doug