Peter Schiff on Bitcoin

[AnonyMint]

http://www.youtube.com/watch?v=mFcTJAQ7zc4

Thanks!  Stefan sometimes guest host on Peter's show.

Everyone should listen to this!

Peter Schiff's repeats most all of my points, but he says a gold-backed private bank issued digital currency would be superior. Schiff misses the point that such a private bank issued digital currency isn't decentralized, and thus it is highly vulnerable to government control. Other than that, Schiff and I agree on most of his points, including the coming political threat:

http://www.activistpost.com/2013/11/social-logins-for-government-services.html

Schiff's main flaw is he thinks a backed-currency is better. If I debated him, I would demolish his logic on this point. You can see my upthread comments (I think starting on page 11) on why fractional reserves and gold-backed private bank issued notes was a failure. The intrinsic value of a decentralized currency is that it is a currency (unfortunately Bitcoin isn't). 100% pure physical gold has never been a currency and never will be-- was always either debased by shaving, impurity, or fractional reserves in order to distribute widely as a currency. Refer to my debate with MoonShadow before page 11.

We already demolished the "it is a standard" argument.

Schiff is correct that it is much easier for the government to track on the internet, and anonymity is very, very difficult (link is to James Donaldson's blog who was the very first person to interact with Satoshi in a public forum). That doesn't mean anonymity is impossible. But for example CoinJoin or coin mixers really won't work unless the other people you are mixing with never reveal their identity accidentally any time in the distant future.

It is true that all of us want a better option than fiat currency. We just don't have it yet.

[joae1975]

http://www.youtube.com/watch?v=mFcTJAQ7zc4

Thanks!  Stefan sometimes guest host on Peter's show.

Everyone should listen to this!

Peter Schiff's repeats most all of my points, but he says a gold-backed private bank issued digital currency would be superior. Schiff misses the point that such a private bank issued digital currency isn't decentralized, and thus it is highly vulnerable to government control. Other than that, Schiff and I agree on most of his points, including the coming political threat:

http://www.activistpost.com/2013/11/social-logins-for-government-services.html

Schiff's main flaw is he thinks a backed-currency is better. If I debated him, I would demolish his logic on this point. You can see my upthread comments (I think starting on page 11) on why fractional reserves and gold-backed private bank issued notes was a failure. The intrinsic value of a decentralized currency is that it is a currency (unfortunately Bitcoin isn't). 100% pure physical gold has never been a currency and never will be-- was always either debased by shaving, impurity, or fractional reserves in order to distribute widely as a currency. Refer to my debate with MoonShadow before page 11.

We already demolished the "it is a standard" argument.

Schiff is correct that it is much easier for the government to track on the internet, and anonymity is very, very difficult. That doesn't mean anonymity is impossible. But for example CoinJoin or coin mixers really won't work unless the other people you are mixing with never reveal their identity accidentally any time in the distant future.

It is true that all of us want a better option than fiat currency. We just don't have it yet.

OMG!  You see how LTC, PPC, NMC, & NVC are going up like mad!  I keep watching and listening to Peter talk about it.  Peter called this in the last video, but he probably doesn't really know the extent of it.  He has a valid point about how he confronted the .com and housing crowds.  Everyone thought he was crazy.  How is this any different?  There's a book called, "This time is different."  It's basically about how throughout history, it's never different.  For the record, I'm with Peter.  The bitcoin bubble will pop.  Question is, how long do we ride this wave.  I say sell weekly or biweekly.  Don't get caught standing when the music stops.

[LightRider]

http://www.youtube.com/watch?v=mFcTJAQ7zc4

It's a sad state of affairs when we have to argue which is worth more, a shiny rock or a string of bits. Let's investigate a resource based economy.

[AnonyMint]

http://www.youtube.com/watch?v=mFcTJAQ7zc4

It's a sad state of affairs when we have to argue which is worth more, a shiny rock or a string of bits. Let's investigate a resource based economy.

The resource better be knowledge, else you are proposing to resurrect the dinosaurs.

[greenlion]

Peter Schiff is just some technical trader, he's not any kind of academic economist or philosopher.

Arguing about "intrinsic value" and the theory of money is way above his pay grade, when it comes to arguing these points he's just "some guy".

[AnonyMint]

Peter Schiff is just some technical trader, he's not any kind of academic economist or philosopher.

Arguing about "intrinsic value" and the theory of money is way above his pay grade, when it comes to arguing these points he's just "some guy".

His father seemed some what knowledgeable about economic theory:

http://home.earthlink.net/~schiffeconomics/

[joae1975]

Peter Schiff is just some technical trader, he's not any kind of academic economist or philosopher.

Arguing about "intrinsic value" and the theory of money is way above his pay grade, when it comes to arguing these points he's just "some guy".

His father seemed some what knowledgeable about economic theory:

http://home.earthlink.net/~schiffeconomics/

Yeah, Peter and his brother based their book off of their dad's story.

[greenlion]

Peter Schiff is just some technical trader, he's not any kind of academic economist or philosopher.

Arguing about "intrinsic value" and the theory of money is way above his pay grade, when it comes to arguing these points he's just "some guy".

His father seemed some what knowledgeable about economic theory:

http://home.earthlink.net/~schiffeconomics/

Yeah, Peter and his brother based their book off of their dad's story.

Having a father that is a legendary income tax activist who wrote a comic book about a rudimentary theory of money is cool and all, but it doesn't suddenly mean that Schiff has any qualifications in this area of inquiry beyond any person on this board.

[tvbcof]

Yeah, Peter and his brother based their book off of their dad's story.

Having a father that is a legendary income tax activist who wrote a comic book about a rudimentary theory of money is cool and all, but it doesn't suddenly mean that Schiff has any qualifications in this area of inquiry beyond any person on this board.

If end results mean anything, Schiff has demonstrably fewer qualifications than a lot of us who have made a boat-load by correctly analyzing things over the years while he sits there with his thumb up his ass sqealling like a stuck pig as his investments tank.

[AnonyMint]

Yeah, Peter and his brother based their book off of their dad's story.

Having a father that is a legendary income tax activist who wrote a comic book about a rudimentary theory of money is cool and all, but it doesn't suddenly mean that Schiff has any qualifications in this area of inquiry beyond any person on this board.

If end results mean anything, Schiff has demonstrably fewer qualifications than a lot of us who have made a boat-load by correctly analyzing things over the years while he sits there with his thumb up his ass sqealling like a stuck pig as his investments tank.

He was caught with his pants down when he was pushing emerging market economies right before the 2008 implosion.

He doesn't understand how global debt crises resolve:

http://www.foreignpolicy.com/articles/2001/09/01/will_globalization_go_bankrupt

http://armstrongeconomics.com/2013/11/23/real-estate-outside-usa/

In the USA, this is a reaction rally overall in real estate. However, during the wave, peripheral  economies will see their real estate markets peak in 2015. The US is the core so it peaked first. People made money in the States so then they look around and try the same thing in the next market. We should see highs in Switzerland, Britain etc.

This trend also emerged in debt. We saw Greece start to get in trouble in 2010. Then they began to look around and saw Portugal, Spain, Italy, and now France. Whatever trend we see emerge will spread slowly like a contagion.

When we are talking about sector booms, it begins in the core economy. If we are talking about economic collapse, it begins in the secondary or peripheral economies and moves into the core. This is why I have stated you will see the Sovereign Debt Crisis hit Europe and Japan and then move into the USA. This is simply how things work and this was discovered both in modern times as well as ancient times.

[Pokerfan]

I'm done here. Enjoy.

Please leave and don't come back, like you've promised.

[bassclef]

I like Peter, he was economic advisor to Ron Paul during his 2008 campaign. They are both great advocates of Austrian economics and ran with the intention of educating the public about the dangers of fiat currency. I know I wouldn't have understood the importance of Bitcoin if not for these guys, Ron Paul in particular.

However I do think he's wrong on this. I suppose I can't blame him, it's devastating to his business

[joae1975]

I like Peter, he was economic advisor to Ron Paul during his 2008 campaign. They are both great advocates of Austrian economics and ran with the intention of educating the public about the dangers of fiat currency. I know I wouldn't have understood the importance of Bitcoin if not for these guys, Ron Paul in particular.

However I do think he's wrong on this. I suppose I can't blame him, it's devastating to his business

I really want Peter to be wrong on this.  But I keep thinking about it.  The more I do, the more I believe he's right.  Honestly, unless businesses keep bitcoin, save it, and pay wages, etc, it can't proliferate.  What if everyone accepted bitcoin?  That's only good if they keep it.  But the major majority of businesses sell it immediately after the transaction.  This is unsustainable and consistent with a pyramid like structure.  If Peter knows one thing, it's bubbles.  Everytime he comes out against something, he's attacked by its proponents to no avail.  The difference here is that it's the libertarian community, his community, that are attacking him.  He has great integrity to stand up to this.  We believe in the principles of bitcoin.  We want it to succeed.  But until the majority or businesses save them and pay wages in them, it will continue to be a bubble.

P.S.
I'm behind on listening to his show.  I know they've talked about bitcoin this week.  I'll listen in the next couple days.

Happy Thanksgiving!

[Cryddit]

I got a question to counter this.

What is the intrinsic value of fiat money? It is made of paper, some coins of different metals, but most of it is digital.

Intrinsic material value is near worthless.  A $100 bill costs no more to produce than a $1 bill.  Intrinsic value is absolutely unrelated to the value of currency.

Fiat money has value because it is backed by the ability of governments to obtain wealth produced by productive people via taxation.

Productive people by definition, produce goods or services of value.  The government, by definition, has a monopoly on the legitimate use of force.  Therefore the government can always get a share of that value, so government-issued currency represents a share of the future productivity of the productive people who are subject to that government. 

That is not the reason why Bitcoin has value; Bitcoin has value because people doing transactions with it can do so more efficiently and are thereby enabled to produce or retain greater value than they could produce via use of fiat.  At that point bitcoin is "producing value" to the extent that it helps people to produce or retain more value than they could otherwise.

One of the most productive things to do in the 21st century is to cut middlemen out of all transactions, and that is what Bitcoin does.

[MoonShadow]

I like Peter, he was economic advisor to Ron Paul during his 2008 campaign. They are both great advocates of Austrian economics and ran with the intention of educating the public about the dangers of fiat currency. I know I wouldn't have understood the importance of Bitcoin if not for these guys, Ron Paul in particular.

However I do think he's wrong on this. I suppose I can't blame him, it's devastating to his business

I really want Peter to be wrong on this.  But I keep thinking about it.  The more I do, the more I believe he's right. Honestly, unless businesses keep bitcoin, save it, and pay wages, etc, it can't proliferate. 

I'll get to the rest in a minute, but I have to ask this question.  Concerning the claim I highlighted, why can't Bitcoin proliferate without businesses paying wages in it?  How many businesses pay their wages in silver or gold?  How many businesses pay their wages with Paypal or Western Union?  You've been looking at Bitcoin wrong, I think.  It's not a replacement for fiat currencies, although it could work for that.  It's a replacement for a significant part of the financial infrastucture that presently permits online commerce.  That's a multi-billion dollar a year industry that employs tens of thousands of people to produce nothing at all.

What if everyone accepted bitcoin?  That's only good if they keep it.

Why?

 But the major majority of businesses sell it immediately after the transaction.  

Yes, a majority do this.  That majority is (primarily) using Bitcoin as a payment method; as a replacement for credit cards & Paypal.  That leaves a minority of businesses that do not do this, or at least do not do this exclusively.  Some people are, indeed, saving in Bitcoins.

This is unsustainable and consistent with a pyramid like structure.

How?

If Peter knows one thing, it's bubbles.  Everytime he comes out against something, he's attacked by its proponents to no avail.

First, he's not really being attacked by the Bitcoin community.  If he didn't have any respect here, there wouldn't be so much concern for his opinion.  And while Peter does know bubbles, he isn't without errors.  He's had his own misses, although his accuracy is far greater than the average Joe.  Furthermore, I don't think that anyone here is really claiming that Bitcoin couldn't be in a bubble.  It certainly could be.  Bitcoin has been through a half dozen bubbles and pops since I've been here, one more bubble is unlikely to destroy it.  Peter's complaints are that Bitcoin has neither any "intrinsic value" nor backing by a state as legal tender.  These are both (generally) true statements, but are both mostly true with gold as well, and yet gold persists as a monetary asset.  The answer is that many people have faith in Bitcoin for very different reasons than they might for gold.  Peter is a smart guy, but he's missing this one, and he's not alone.  It's perfectly fine that Bitcoin has detractors, if it was all roses with no complaints, I'd be worried that all of us were overlooking a potential problem.  Personally, I'm happy that Peter argues against it, and that others try to change his mind.  This kind of very public debate is healthy for Bitcoin. both technically and phsycologically.

[AnonyMint]

I got a question to counter this.

What is the intrinsic value of fiat money? It is made of paper, some coins of different metals, but most of it is digital.

Intrinsic material value is near worthless.  A $100 bill costs no more to produce than a $1 bill.  Intrinsic value is absolutely unrelated to the value of currency.

But fiat has ubiquitous confidence, otherwise society doesn't exist.

Society only has two choices.

Fiat money has value because it is backed by the ability of governments to obtain wealth produced by productive people via taxation.

Productive people by definition, produce goods or services of value.  The government, by definition, has a monopoly on the legitimate use of force.  Therefore the government can always get a share of that value, so government-issued currency represents a share of the future productivity of the productive people who are subject to that government.  

Correct and realize what the second choice is and realize Bitcoin isn't it.

That is not the reason why Bitcoin has value; Bitcoin has value because people doing transactions with it can do so more efficiently and are thereby enabled to produce or retain greater value than they could produce via use of fiat.  At that point bitcoin is "producing value" to the extent that it helps people to produce or retain more value than they could otherwise.

One of the most productive things to do in the 21st century is to cut middlemen out of all transactions, and that is what Bitcoin does.

Bitcoin is not a transactions coin and can never be (at least not before a ponzi collapse and a government forced confiscation and redistribution). Refer to the above links.

Peter Schiff is correct about this point.

[Cryddit]

I'm with you about the Ponzi Collapse.  That's definitely going to happen.  A government-forced redistribution, I kinda doubt.

Bitcoin is and will be a coin for e-commerce, transfers, and remittances; that is what it does best  (Although I'm counting on the dev team to fix some scalability issues here).

Right now, people are holding it as an investment, just because it's been going up.  That isn't sustainable.  It already has a price *FAR* beyond the value that people are NOW getting from using it in e-commerce or to transfer money.  But we suppose that in the future more people will start using it for that, hence we suppose that its current price is far below the eventual value it will provide for those purposes.  

However, once it has the value correct for its role as a fully deployed, actually useful transfer and remittance coin, all further gains are pure Ponzi Bubble, and will collapse as the bubble comes to an end.  When that happens I expect Bitcoin to lose 90% or more of its price and *NOT* start going up again.   But I also expect that the final price will be at least two and possibly three orders of magnitude higher than where it is now, and the tip of the bubble to be an order of magnitude higher than that.  

[AnonyMint]

...A government-forced redistribution, I kinda doubt...

....However, once it has the value correct for its role as a fully deployed, actually useful transfer and remittance coin...

Without redistribution, it can't become a currency without bankrupting the middle class, which of course will not be tolerated by society. Thus the value (note I didn't say price, as the price can go as high as the participants want to pay) you propose can't be reached before a massive redistribution event, and such event can't occur via market price transfer. There simply is no other way to get from here to there without a change to the Bitcoin protocol, government intervention, or a proliferation of altcoins (note Litecoin is now $36). See the first link below.

Bitcoin can't do this, because there isn't any trend to spending which doesn't bankrupt the middle class. Thus the only way for Bitcoiners to exit is via "rake", i.e. not spending (nor investing as BTC) rather converting back to fiat.

[Cryddit]

No way to do it without bankrupting the middle class?

Um, why?  If there is no redistribution (ie, Satoshi continues to sit on his money) the money that's not in circulation simply doesn't count -- ie, the value produced will be the same whether there are 100 coins in actual circulation, or 21 million.  The difference is that with just 100 coins we'd need a unit smaller than Satoshis.  But that's easy.

The market cap of coins in actual circulation, I expect to be about equal to the value it provides in its roles relative to the banking system now in place.  If 90% is held out of circulation by the earlier adopters, then that market cap will be spread over one-tenth as many coins and the equilibrium price will be ten times higher.  As oldtimers start using the coins that have been held out of circulation, the equilibrium price will simply go down.  But if the old timers aren't complete idiots who spend their coin all at once in unison, the price won't come down more than 5 or 10 percent a year.  And people are entirely used to that kind of inflation.  

[AnonyMint]

Try reading the links I provided, as it is explained there why your logic is incorrect. In short, the masses don't have BTC yet, they have fiat, so the relative value does impact their net worth.

You could make an argument that most people are in debt or are subsistence laborers, thus they have no net worth any way. So all they care about is receiving BTC in payment for their ongoing labor.

However, it is the middle class which still has net worth that makes that decision because only they can buy and obtain Bitcoin (unless the rich hoarders spend all on labor, but that again is chicken and egg problem because the laborers can't accept BTC because they can't spend it).