CEO of Euro Pacific Capital and chairman of SchiffGold, Peter Schiff, has once again provided critique of Bitcoin. The self-proclaimed gold bug used the opportunity presented by today’s downswing in Bitcoin price to argue his favourite yellow metal’s superiority over the digital currency.
However, in his critique, Schiff seems to forget one crucial thing Bitcoin is only 10-years-old.
Schiff: Bitcoin is “Fool’s Gold”
In the latest round of the Bitcoin vs Gold debate, self-appointed spokesperson for the precious metal, Peter Schiff,has taken to Twitter to renounce the world’s most popular crypto asset by market capitalisation.
After the price of Bitcoin plummeted from highs of over $13,700 down to less than $11,000, Schiff took the opportunity to provide his take on the “idea that Bitcoin is just like gold”.
The idea that Bitcoin is just like gold is utter nonsense. Bitcoin is nothing like gold. It’s fool’s gold. There is not a single use case where Bitcoin can be used as a substitute for gold. Plus the gold price never falls by over 25% in less than 24 hours!
— Peter Schiff (@PeterSchiff) June 27, 2019
The premise that Schiff appears to be battling the confines of Twitter’s character limit to get across is that gold is valuable because of its few industrial use cases and because you can make jewellery out of it. This is clearly false. Central banks around the world aren’t stockpiling gold in vaults so that it can be made into mobile phones and wedding rings.
Being a non-physical asset, Bitcoin is clearly unable to find utility in the manufacturing of electronics and lines of code can’t be worn around someone’s neck. However, this couldn’t matter less. Bitcoin, like gold, sells for the price it does because people want it. They want it because it’s rare and humans as a species have decided that this “thing” is important. With a finite supply, the amount of money people are willing to pay to own said “thing” goes up. It doesn’t matter what it is: gold, Bitcoin, the last bottle of water on a desert island, the market will decide the price of it based on what’s available and who wants it.
If we compare the two assets at their ability to provide the service currently most coveted of them, storing value, Bitcoin emerges as a clear favourite on all but one metric – historical precedence.
Like gold, Bitcoin can be used to transfer huge amounts of value from one individual or organisation to another. However, unlike gold, Bitcoin is cheaper and easier to securely store (no vaults, guns, security guards), it’s a lot more divisible (no expensive machinery involved by the buyer just to make a small purchase), and it’s cheaper to transact with (despite rising fees sending Bitcoin is still less expensive than an armed convoy of vehicles and police escorts).
As mentioned, the only place Bitcoin falls down is historical precedent and since gold has so much of that on offer, humans have no way of knowing exactly how gold was accepted as a form of money by people around the world. It is in fact quite likely that the price discovery period of gold was far more shambolic than we are witnessing today with Bitcoin prices.
Put simply, money is a technology and technologies replace one another. The horse and cart was replaced by the motor car; the letter, largely replaced by the email. Schiff in his staunch opposition to Bitcoin increasingly appears as someone desperate to stand against the exploration of monetary technologies that can potentially improve the lives of billions and all to protect his own interests in the precious metals markets.