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Bitcoin vs. Gold: The Future of Money - Peter Schiff Debates Stefan Molyneux

Is bitcoin a bubble? Does gold have an intrinsic value? Is bitcoin a ponzi or pyramid scheme? Peter Schiff thinks so. Stefan Molyneux and Peter Schiff discuss Bitcoin vs. Gold and the future of money.



Here's a much better bitcoin debate....

Ed & Ethan 86 Bountiful Baskets of Bitcoin Banter, Blather, and Bluster.

Well, we had a veritable cornucopia of stories lined up for this week but the Bitcoin bug bit us and bit hard.

After hearing Peter Schiff talk about how Bitcoin is a Ponzi Scheme, we decided to book him for a quick back and forth that turned into an entire segment! We couldn't let it go and turned to Erik Voorhees, a Bitcoin business rockstar and eloquent defender of the world's leading cryptocurrency to take on some common myths pushed by Peter during our second half.

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You don't have to

You don't have to have any faith because you don't have to use it. You just won't be a part of the take-down, should that happen. I think everyone would be fine with that. Some of us would rather choose a different path.

Ah, but I do have a promise and it's one I trust much more than the Fed. What I trust is that eventually and at some time I cannot predict, the Fed WILL confiscate some part of my personal wealth. They have already stopped me from using it to run my finances as I see fit by mandating I enroll in their retirement plan and then stopping me from withdrawing or borrowing from it. And their choices for that forced savings are all denominated in FRNs which are worth-less every day.

Bitcoins, on the other hand, are promised to be paid to me by a human person via the venue of my choosing, with said funds to be open to my sole control. With each passing day, perhaps millions more people join this trusted group. We trust each other that goods and services can be traded in an amount set forth by an incorruptible mathematical formula that relies on a collective of the whole group.

You do realize that inflation on the dollar is cumulative since 1913, right? Of that "One Dollar" of promised gold - scratch that - promise, what actual value do you get? The answer is 3-4 cents.

The so-called contracts you cite for modern banks were drawn up behind closed doors, the result of secret meetings of collusion among the major industry players. They are routinely altered, even after the fact (robo-signing???) and often contain fine print that hides pre-disposition towards outright fraud. And the promises given to you by them all rely on the word of their top man. If that's not the best definition of blind faith in a religion, I don't know what is.

Who controls the internet?

I think that the biggest problem we have is the FACT that the ptb control the internet, traffic, switches, providers, etc., and Bitcoins depend on the internet. So, it's only a matter of time before they squash it, control it, or create their own alternative.

You really want a digital currency that is off the grid? Then you need to create your own grid... For now, at least gold and silver and bartering can operate off the grid...


Sorry, but no one controls the internet. "They" may have some power over DNS (the name to number translation network), various TLDs (.com;.mil;.edu;.net...), many back bones and even some power over various large scale ISPs... but that's not the entirety of the internet.

Just like they can flip a switch and kill all .com or .mil traffic on a certain leg, we can flip a switch and avoid using it. People have just become so enamored by its utility that they forget it's really nothing more than you connecting your computer to mine. Extend this to cell phones and you find that with one simple mesh app, entire cities could connect their cells and WiFi networks into their own internet, all for no cost. Add in a few hardware additions and you've got satellites, radio, laser, light and other city-to-city connections. This is the exact method that Africa will use when they take over internet dominance (adoption rate) almost overnight.

However, your position is that we don't want our money dependent on the internet? Sorry to disappoint you but it's been so for years. Most large companies do payroll via files transferred online. All companies that I know of manage their multiple bank account actions via the net. If anyone took down the whole internet, the entire modern world, including governments, would screech to a halt.


I control the internet. I have the power switch and I pay the power bill too.

When I'm done with the internet, I just walk away from it.

I don't have any more attachments to it.

I don't require it to communicate with my fellow man.

I don't require it to make daily business transactions.

I don't need it to do business.

It is not required while exercising my rights to contracts.

The internet solves one problem. The proximity problem. Nothing more. I still need to depend on my primary senses more.

Don't get caught in the web. Only spiders make webs.

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Good points about

city-to-city / other smaller / independent grids.

Cell signals, though, flow through their switches so they in essence control those too. I was thinking of possibly short wave radio grids :), those too can be intercepted, so who knows...

Bitcoins just seem like a fad though, and with the recent huge thefts of bitcoins and looming government crackdowns, I don't have much interest in buying any. I'd be more interested in stocking up on items that can be bartered/sold/store value.

You should

check more into mesh apps. You can get them now that let you hop across all WiFi devices with it installed, to get to anywhere this little network reaches. Soon or maybe already, I don't know, this hopping will happen on cell signals too, without a tower. In other words, each cell phone will talk to the next one and that to the next one, down the line. When that happens, every device connected in any TCP/IP compliant way to any device on all these mini networks, will be able to 'internet' to every other such one. That's the awesomeness of a protocol like TCP/IP. It sets the rules and doesn't care about the equipment.

As an example, it's estimated that over half a million WiFi device in NYC are running mesh software right now. If one can't get a signal, they can tap through any other meshed device and probably never know it.

For me, the best town-town system would be line of sight laser. It's hard to intercept a laser beam without the destination knowing.

Oh, and if you leave your wallet in public, your money can get stolen. Same for $ and BTC.


Mesh networks show promise and lazer does sound extremely secure.

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Peter Schiff makes more sense...

very logical points made by Peter.

Bitcoin is probably the Myspace of currency :) The Facebook of currency will be when the big banks/Credit Card companies issue the electronic currencies with the blessing of the governments...

That's a fallacy

Bitcoin can't be the Myspace to a future currency's Facebook. Those are examples of competing end user systems. Bitcoin is more the equivalent to SMTP which is the standard that competing email clients use to let them all interact together. Both adhering to the SMTP standard protocol, all email clients (outlook, gmail, yahoo, aol, or linux's thunderbird) would still be subject to competition. Sure, there may be some future competing protocol war, like x56 modem wars, AM vs. FM, Beta vs. VHS or MAC vs. PC but those were taking place because of limitations in each competitor. Usually one had better quality while the other was more compact and user friendly. In the end, most of these wars allowed the loser to stay alive, just with a smaller market share. I can't see any overall shortcomings in this money transfer protocol and if there were any, it would most certainly get addressed on GitHub.

Besides, your argument that people would accept Chase's government-approved digital currency nearly cost me a new keyboard! And I'll bet I'm not the only one here.

Bitcoin is a medium of exchange.

People have used all sorts of things as money. Money is used to transfer wealth and claims on wealth. A dollar is a claim on wealth. Gold is wealth. Currency or gold can be held as a stable store of value.

People will buy gold and hold it in the belief the price will go up, Otherwise, they will sell it in the belief it will drop in price.

The supply of gold is relatively static. So, what drives price in dollars is demand and the supply of dollars.

Most dollars are digital now. There is much more money than printed currency. All of the credit/debit card transactions are digital currency transfers. Paying for things on line is all digital. Bitcoin is nothing new in that regard.

The advantage of bitcoin is banks charge to transfer money from one account to another and bitcoin transfers without the transaction fee.
Peter Schiff's argument is gold has an advantage of a track record of being accepted as a medium of exchange for thousands of years and is therefore low risk as a store of value that bitcoin does not.

The supply of bitcoin and that of gold are stable, so the question is demand with regard to bitcoin being a store of value. Will bitcoin survive competition from other currencies, some of which do not exist yet?

This is like asking what will happen to the Mexican Peso or Canadian dollar if Scotland becomes independent and issues a Scottish pound. Gold and silver and platinum and nickel and copper coexist. The use of one currency doesn't preclude the use of others.

Just like there will be an exchange rate between pesos and dollars and gold and silver, there will be one between bitcoin and all of the others.

So, why use bitcoin? One advantage is the avoidance of bank transaction fees in moving the money around.

Why not? As a store of value it is volatile and has a short track record. Taxes cannot be paid directly in bitcoin.

When the Zimbabwe dollar was inflated out of existence, the government forbid transactions in the country in anything but the local currency. The economy collapsed and people were forced to barter. When the government lifted the restrictions on what currency could be used in the country, the shelves were resupplied and the hourly raising of prices stopped. Anyone with savings in Zimbabwe dollars, however, was wiped out.

The advice to investors is always to diversify. Don't put all of your eggs in one basket. Dollars in banks and investment accounts are exposed to inflation and confiscation. Hard currency in your personal possession is less so. Since bitcoin is inflation proof it might be a hedge in the long term. In the short term, it is too volatile.

I think the difference between Stephan's and Peter's view is the former is looking at bitcoin's advantages as a medium of exchange and Peter is emphasizing bitcoin's risk as a store of value.

[F]orce can only settle questions of power, not of right. - Clyde N. Wilson

I agree with everything you said

and you said it very eloquently! Good comment.

I would like to add one thing. In your Zimbabwe example, had they had bitcoin available with, say, 5-7 year's track record behind it, they most likely would have used it to aid their bartering period. In this way, it becomes a winner in the competition among all fiat currencies.

For me, I don't care about its volatility or its meteoric gains as an investment. I care that it puts fiat out of business long term. I also don't care if it ends up being the winner or if another tops it, but I think that a transition from it to another will definitely set the entire movement of 'people's money' back at least 2-4 years. I'm getting impatient for the people to halt the theft of their prosperity by the banks.

Protocols and competition

SMTP wasn't the first email protocol. If you want to use that analogy, bitcoin would be maybe uucp, which hasn't gone to zero but obviously lost its market share.

Can you think of a single example of a protocol that was the first big mover in a new technology, that didn't eventually lose out to competitors? In theory those competitors could have adapted to overcome shortcomings, too. In practice, that's not how it happens. You might be right, and bitcoin could be the first, but I don't see any rational reason to expect it when historical precedents are all pointing in the opposite direction.

Ah yes, UUCPNET and Bang Paths!!!

You're dating yourself here, but then maybe so am I! lol

I would look at UUCP as more of a TCP/IP protocol layer since it offered many of the services ran on TCP now. Sure, you could send email but that was basically on a closed system of software and of computers. (Kind of like the BBS days) It wasn't a generalized set of instructions for the world to use, even if they're running on a Xtal radio link.

I think both SMTP and TCP/IP are actually the examples you're looking for. Thinking back, TCP was first (even the satellite comm used it in hardware form in the 70's) and it kicked Token Ring and ArcNet's butt. Still going strong today. SMTP was on the ropes for a long time against PPP but I think that's pretty much settled too.

Either way, I don't think past history ever precludes present predictions, so it doesn't matter. The meat of it for me, is that it does all that we can think of wanting now and lots more and there doesn't seem to be a drawback that would cause someone to create a competing protocol. Clients? Heck yes. But not protocol. So, until that happens, it's just going to keep gaining market share and setting down roots.

In retrospect, I just though of ArpaNet and their email system but I don't think that qualifies as a first big mover or an open protocol.

Thnx for the stroll. ;)

SMTP wasn't the first though

SMTP looks the way it does as a result of what was learned from all the predecessors. TCP was also building on experience with previous networking protocols. HTTP replaced Gopher.

In contrast, bitcoin is the first ever crypto-currency. I guess you could say it builds on things like Flooz but that's a stretch. Was anything before bitcoin trying to solve the problem bitcoin is trying to solve?

Plus, I think you're vastly overstating the ease of bitcoin evolving. But I think this is the crux of where our intuitions diverge:
The meat of it for me, is that it does all that we can think of wanting now and lots more and there doesn't seem to be a drawback that would cause someone to create a competing protocol.

You don't think there are any drawbacks to bitcoin that would motivate someone to create a competing protocol? Ripple is an attempt to do something very different from bitcoin -- I don't think it succeedes but it's clearly an example of someone motivated to create a competing protocol. Peercoin is another example where someone saw some flaws in bitcoin and was motivated to create a competing protocol. You could go through the bitcoin "weaknesses" FAQ and pick several more things that could motivate a competitor.

If I had to pick one thing that I'd guess some smart people are thinking about right now, it's the extent to which the "great firewall of China" could disrupt bitcoin usage in China. The globally replicated blockchain is a clever idea, but it's also a point of vulnerability, and a competitor with a solution to that vulnerability would have a strong advantage, at least in China. And elsewhere, unless you think that in times of war, extreme political tension, currency collapse, etc., you can always count on having global internet connectivity.

Have you looked around at the sheeple?

Not that I agree, just sayin, most sheeple would accept McCurrency over Bitcoin...at least in the present state of affairs.

That being said, I like the fact that Bitcoin exists, and I would like to see many more competing digital currencies.


Bitcoin is not a protocol. The software uses the TCP/IP protocol just like all other regular internet traffic.

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Stefan Molyneux makes the claim in a previous video that making currency without backing is counterfeiting. He also has a video on double think. I do enjoy some of his videos though.

Why the change of heart?

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I don't believe you understand bitcoin

when you write that. Printing money without backing is not what is happening with bitcoin. Nobody using bitcoin has their own printing press and the upper bound of bitcoin supply is fixed. Creating a bitcoin involves the expenditure of resources. A fiat currency is only limited to the amount of ink, paper and the number of zeros you can fit on that paper.
Counterfeiting of currency involves creating money out of nothing without a license. Doing it with a license does not mean those with a license cannot print as much as desired. There is no upper bound beyond which the already existing money can be diluted with or without a license. Bitcoin does not have that problem if fake bitcoins cannot be manufactured.
I don't see any inconsistency here on Molyneux's part.

[F]orce can only settle questions of power, not of right. - Clyde N. Wilson


I don't believe you understand religion.

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I don't believe I understand your comment.

[F]orce can only settle questions of power, not of right. - Clyde N. Wilson


You don't even know what to believe.

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Those are the facts. Go ahead and down vote without comment. Shows you want to hide something.

Stefan Molyneux has been throwing RP under the bus for some time now.

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DJP333's picture

This should be interesting!

Bookmarked for later viewing. Am a big fan of both of these guys.

"It’s not pessimistic, brother, because this is the blues. We are blues people. The blues aren’t pessimistic. We’re prisoners of hope but we tell the truth and the truth is dark. That’s different." ~CW