In practice, individuals would be able to purchase digital currency from the state. The state would then use the money to purchase gold that would be held in the Texas Bullion Depository or another secure vault. Individuals would be able to redeem their digital currency for dollars or gold.
If you think it's flawed, I'm interested in your thoughts.
Interesting distinction you're making here. Can you demand gold for these digital coins? Or, is the number of coins limited to the amount of gold they have? If it's the later then this is really no different than instruments such as $GLD
Here's the actual text. It's not a currency. It's a transferable token which grants you the right to a specific weight of gold. These things exist already. Any major gold vendor sells either physical gold or a certificate for a specific amount of gold.
Can you explain in your own words how a currency can be backed by a commodity in this day and age?
I will then explain to you why it is impossible.
I'm not looking for debate (as the thread title states, I'm just wondering what people think).
However, there's another article explaining how the Texas cryptocurrency would work, so I'll just quote it:
https://www.zerohedge.com/markets/texas-bill-would-create-state-issued-gold-backed-digital-currency
If you think it's flawed, I'm interested in your thoughts.
That's not a commodity-backed currency. That's just a token to buy gold and silver.
Interesting distinction you're making here. Can you demand gold for these digital coins? Or, is the number of coins limited to the amount of gold they have? If it's the later then this is really no different than instruments such as $GLD
https://legiscan.com/TX/text/HB4903/id/2737537
Here's the actual text. It's not a currency. It's a transferable token which grants you the right to a specific weight of gold. These things exist already. Any major gold vendor sells either physical gold or a certificate for a specific amount of gold.