Gold doesn't need to "backed". It is the backing.
Gold has utility as money because it has use beyond use as a medium of exchange. It is used in industry, has chemical applications, there's gold in my computer's motherboard, gold nanoparticles kill cancer tumors, gold in some people's teeth, and so forth. It has use as jewelery and decorations. It's pretty to look at. It has its largest use as money, but this rests on its use as other things. It takes time and work to mine it, so the supply is finite.
During his life several millennia before the birth of Christ Aristotle laid out the principles of what he considered good money.
He said all good money was
1. Divisible You could easily divide it into smaller sums, to make change.
2. Durable It lasts a long time.
3. Convenient You can easily carry it around with you.
4.Consistent It always has the same value.
5. Valuable Its useful in and of itself.
Gold meets all of these characteristics pretty well and is therefore a good money.
I think people see bitcoin and think "what is to stop the coders from changing the rules and increasing the number of bitcoins thereby enriching themselves?". That was my first thought and why I wrote off bitcoin at first. If you're not a mathmatics freak and basement dwelling code checker, you'd see it as having potentially many of the same flaws as any fiat, non-commodity-backed, non-commodity redeemable currency. I'm sure that's how Peter Schiff sees it.
For once, I disagree with Peter Schiff. He wants the dollar backed by gold and silver because gold and silver are scarce resources. Bitcoin is also scarce, so I don't see what the problem is.
He wants the dollar backed by gold and silver because of his large position in gold and silver.
He wants the dollar backed by gold (and silver?) because it is best for savers and doesn't allow inflation if handled properly. He has a large position in gold and silver because he knows the dollar will not be backed by gold and silver.
