FORBES: Here’s What Peter Schiff Got Wrong About Bitcoin on Joe Rogan’s Podcast
Euro Pacific Capital CEO Peter Schiff was on The Joe Rogan Experience podcast last week, where the two discussed free markets, Puerto Rico, bitcoin, and more. Schiff has been a critic of bitcoin for many years, and he shared his bearish take on the digital asset during the show.
Although Schiff was quick to admit that the bitcoin price has skyrocketed since his last appearance on The Joe Rogan Experience roughly three years ago, he still believes the entire cryptocurrency market is in a gigantic bubble that will eventually collapse.
During his discussion with host Joe Rogan, Schiff made multiple points about why he doesn’t believe in the viability of bitcoin over the long term; however, many of these points don’t hold up to even the slightest bit of scrutiny.
Comparing Bitcoin to Pets.com or Tulips
Like many other bitcoin critics, Schiff has often compared bitcoin to overvalued assets throughout history such as Pets.com and the Dutch tulip mania in the 17th century. According to Schiff, the current mania in bitcoin is based around the belief that it will eventually become a widely-used form of money.
“They almost believe it like a cult,” said Schiff.
It should be noted that the belief that gold will become a more widely-used form of money is also a huge part of the basis of Schiff’s reasoning for buying and holding the precious metal. Critics of gold bugs have often made the same argument Schiff is making against bitcoin here — but instead aimed at the gold market.
Schiff also pointed out that the price of Pets.com went up during the dotcom bubble too, but that didn’t mean that people were right to buy it.
“You can be wrong, but still profit from being wrong as long as there are other fools who are also wrong,” explained Schiff.
Schiff is correct here to point out that just because the price of bitcoin has gone up over the past few years does not mean that it will continue to do so.
Nobody Wants to Use Bitcoin as a Medium of Exchange?
Another argument made by Schiff during his appearance on The Joe Rogan Experience was that nobody wants to use bitcoin as a medium of exchange. This is an odd argument for a gold bug to make as nearly no one in the world uses gold as a medium of exchange either. In fact, you can book a hotel with Expedia or buy a Dell computer with bitcoin, but you cannot do the same with gold.
From Schiff’s view, a cryptocurrency’s value is only based on the willingness of others to accept it.
“The only thing I can do with my bitcoin is give it to somebody else,” said Schiff.
Of course, this is also true of other forms of money that have existed throughout history, including the current version of the US dollar. Although it was originally linked to gold, the US dollar is now backed by the “full faith and credit” of the United States Government.
In the past, Schiff has argued that the US dollar does have one form of backing in terms of tax payments. American citizens are forced to use US dollars to pay their taxes.
This sort of backing also exists in bitcoin. There are certain types of online payments, whether it be ransomware or shopping on darknet markets, that must be completed in bitcoin because of the intrinsic properties of the network that make it resistant to censorship.
Schiff is correct to point out that the general public does not have a desire to use bitcoin, but there are still situations where bitcoin is the only option. The general public also doesn’t want to use gold, but such situations where gold must be used for payments do not exist.
This gets to a common theme in Schiff’s arguments against bitcoin where they can almost always also be applied to gold. Sometimes the argument applies even more harshly to gold. After all, how many online merchants accept gold payments?
Schiff also noted that many online merchants who claim to accept bitcoin actually convert the digital asset to US dollars or some other form of fiat currency immediately after accepting the payment through a service called BitPay. While he considered this a knock against bitcoin earlier in the podcast, he then went on to tout a GoldMoney debit card that allows GoldMoney users to spend their gold at any merchant that accepts MasterCard, completing contradicting his previous point.
The GoldMoney debit card touted by Schiff works in the same manner as BitPay in that consumers are able to spend their gold and merchants are able to receive US dollars.