"I haven't changed my views."
Edit: Oddly, I can't post the link. But someone else somehow managed to here:
https://bitcointalk.org/index.php?topic=621608.0Accepting Bitcoin concedes nothing. It doesn't imply Schiff personally believes Bitcoin is legitimate any more than accepting dollars implies he believes dollars are legitimate. He runs a business so he can make a profit. Whether he ultimately realizes that profit in dollars, bitcoins, gold, stocks, or stuffed pandas is none of our business.
Anyway, Schiff's false perception about Bitcoin is not specific to Bitcoin; it's rooted in a deeper misconception about money as a whole. While he understands money better than most people (i.e. he gets that PMs are real money and fiat is not), he unfortunately gets hung up on the idea the money must have "intrinsic value". This is not the same concept as "store of value", which is the ability to retain value over a long period of time.
In short, there is no such thing as "intrinsic value". PMs, like other physical items, are just that. Stuff. Lumps of matter. They have no "value" property embedded in their chemical composition. Value by definition is only measured by how much people want said stuff. Even food has no "intrinsic value", it only has value because
people want to live. Market value is the current overall average of how a population values a commodity, and store of value is attained when this measured value has proven to remain relatively constant over a long period of time. (PMs have retained a relatively stable store of value over time, while fiat has not due to its increasing supply. Hence, the concept of store of value is often associated with finite supply, as the two usually go hand-in-hand.)
From what I gather while listening to Schiff, when he talks about intrinsic value, he's really referring to a secondary utility. In addition to fitting the
requirements for being money, PMs also have industrial applications completely outside their usage as money. This is certainly a plus for PMs, as it can assist in stabilizing prices and enhance their store of value. But contrary to Schiff's beliefs, this is not actually a requirement for something to have any store of value at all, and therefore to qualify as money.
To qualify as money, a commodity must be unit of account that is portable, divisible, fungible, durable, and a store of value. There are very few things on the planet that meet all of the criteria; in fact, PMs have historically been the only things that have ever met them. Because of this, it is easy to mistake other properties of PMs such as secondary utility as additional requirements, when they really aren't.
Remember how money came into existence in the first place: the free market simply needed a commodity that facilitated trading so people could avoid the difficulties of barter. Given the rarity of such commodities, anything that does qualify is going to be valued as money regardless of its other properties. In other words, society needs at least
something to qualify as money, and whatever it is, it's going to have value simply for meeting these strict requirements.
This is what makes Bitcoin so fascinating. It places a direct challenge to conventional theories of money on a very abstract level. While it attempts to meet the requirements of money, it claims to do nothing else. Instead,
it competes with other forms of money simply by being a better money than anything else. No other commodity has ever done this so deliberately. But it's the most easily portable among the candidates, it's arbitrarily divisible, it's durable (as long as the user isn't an idiot), it's fungible (although I'm not sure whether coin history on the public ledger will affect this), and while store of value hasn't been proven due to its youth, it may eventually achieve this merely from having a finite supply. And of course, it doesn't require third party trust, something that hasn't been available since people traded actual gold and silver lumps on the street corner. (This addresses the "it's not backed by anything" argument. It
shouldn't be backed by anything, since by definition that would require third party trust.)
So far it seems to be working. People want a portable and divisible unit of account in order to trade, secondary utilities be damned.
*Some people claim the blockchain has value independent of the price of bitcoins because other protocols can be programmed on top of it. But I submit that it does not. If the price of bitcoins goes to zero, then no one mines, and thus there's no network. Therefore, these applications do not qualify as independent secondary utilities in the way that gold and silver have independent utilities that would be maintained even if they no longer had monetary usage.
