As the problem of Bitcoin's fluctuation in value over time continues to vex proponents of the cryptocurrency, I've seen several suggestions that Bitcoin should be "pegged to the dollar" or "pegged to gold".
What does it mean for a currency to be "pegged to gold"? It means that the government that backs the currency commits to exchange units of the currency for a fixed quantity of gold. This has a number of problems associated with it - the quantity of gold is relatively fixed (just like Bitcoins), but the government can always print more money. In practice the pegged currency has to be rather stable in the first place for the pegging to be successful, and the value has to be controlled carefully through printing more or buying it back with bonds.
And there we can immediately see the three problems in the "pegging" solution proposed for Bitcoin - a) you can only peg a non-volatile currency, b) you need to be able to control the production of the currency to affect its value and c) you need a backer who guarantees to exchange the currency for the item it's pegged to, and holds significant quantities of the item in store.
Bitcoin satisfies none of these.
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