Gold Bug Peter Schiff Says 'Cryptocurrency Market Signals Are Wrong'
This week the media outlet RT published a new Keiser Report from the Freedom Fest 2017 conference in Las Vegas with host Max Keiser. During the report, Keiser talks with the economist and long time ‘gold bug’ Peter Schiff about the decentralized currency bitcoin. Schiff says he understands that people want an alternative to the current monetary system but believes an alternative to fiat will not be cryptocurrency or what he calls “digital fiat.”
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Bitcoin Is Just a Form of Digital Fiat Based on Faith
Peter Schiff is a well-known economist, precious metals proponent, and a person who doesn’t like cryptocurrencies at all. Max Keiser discussed the global economy, Trump, and the Federal Reserve with Schiff at the Freedom Fest event held in Las Vegas last month. Then the two further delve into a conversation about the rise of bitcoin and Schiff gives great detail into why he doesn’t favor this technology. Schiff believes bitcoin and other cryptocurrencies are merely representations of digital fiat.
“Our monetary system is based on faith because there’s nothing real behind dollars or euros, and it’s just based on the fact that you believe people are going to want it,” explains Schiff. “Other than that, the other thing currencies have is that governments accept it or require it for payment of taxes. So if you live in America, the IRS wants your taxes, and you better send them dollars. That’s what they accept there, and there is a natural demand for dollars to stay out of jail.
[Bitcoin] is the same concept. It’s being created but there is no real value in bitcoin it’s all based on faith. If somebody doesn’t want your bitcoin there’s nothing you can do with it right?
People Hold Bitcoin as a Speculative Asset
Of course Max Keiser a long time cryptocurrency advocate disagrees with Schiff and says that a lot of millennials believe bitcoin is a form of ‘digital gold.’ Keiser tells Schiff as a business person he should be on board with this trend or otherwise he’s ignoring an entire market.
“They are wrong,” Schiff tells Keiser. “The people that are using it [Bitcoin] are using it as a speculative asset. I talked to a guy today who showed me his cryptocurrency portfolio, and he had like $50,000 — I asked him have you ever spent any? He said “no,” and he’s never used it in commerce — He’s speculating on it, and he owns it as an ‘asset.’”
Keiser counters Schiff’s argument with the fact that gold bugs don’t spend their precious metals either, and they hold it as a speculative asset. Further, Keiser says a lot of these ‘gold bugs’ pay storage fees just to store gold in a secure location.
“Look [Bitcoin] is never going to be used as money,” Schiff tells Keiser. “People can buy it, and the price can go up until the price collapses, and people don’t want it anymore.”
People who are buying it think that one day bitcoin is going to be a currency that everyone uses — It’s going to be worth a million dollars a bitcoin. It’s impossible. First of all there’s already a thousand other cryptocurrencies and how many more can there be? Merchants don’t accept it, they get paid in dollars. No merchants are pricing products in bitcoin.
‘Market Signals Are Wrong’
Schiff doesn’t believe in the market signals Keiser describes. The economist explains that the market was giving signals during the dotcom bubble and other types of stocks. However, Keiser says that even though the dotcom bubble burst, Google and Amazon still rule the world.
“Amazon is one, there are hundreds that went to zero,” says Schiff. “So how do you know? What if somebody comes up with a digital currency a year or two from now that is so much better than bitcoin? It’s everything bitcoin does, better, faster, and cheaper. Everyone then wants that new one, and nobody wants bitcoin. It’s worthless.
Nobody wants it anymore because somebody came up with a better mouse trap. Of course I don’t think that’s going to happen, because I don’t think any of them will work. If we are ever going to have digital currency they will have to be backed by gold! They’re not going to be backed by nothing.
Keiser believes bitcoin has a lot of similarities with the very precious metals that Schiff advocates for on his show and at conferences. Still, Schiff to this day will not accept bitcoin as a form of ‘money’ and thinks it will never be widely adopted.
“Sure, there is digital scarcity — There is 21 million bitcoins, but if nobody wants them they are worthless,” Schiff adds.
What do you think about Peter Schiff’s opinion regarding bitcoin and cryptocurrencies? Do you agree with Schiff or do you agree with Keiser? Let us know your thoughts in the comments below.
Images via Pixabay, RT, and Twitter.
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