Peter Schiff – economist, stock-broker, and gold promoter – argued that Bitcoin did not pass the test for a global reserve currency in his latest podcast released earlier today.
In a pointed gesture to his Twitter spat with Anthony Pompliano yesterday over Bitcoin’s status as a safe-haven asset, Schiff said that Bitcoin enthusiasts had been forced to acknowledge that the digital coin was not equivalent to digital gold and that it was a risky investment.
Schiff elaborated that Bitcoin, as well as the other currencies, were introduced through a digital currency narrative that had fundamentally fallen apart. Since then, Schiff argues, crypto enthusiasts shifted to a description that painted Bitcoin as a stored-value asset (instead of a medium of exchange), much like gold.
Bitcoin is Not Digital Gold; It’s Digital Risk
However, Schiff completely dismisses the narrative that Bitcoin is comparable to digital gold. He alleges that rhetoric is merely something the crypto community panders to in a bid to promote increased adoption of digital coins.
Gold has multiple uses: not only was it used as a medium of exchange in the past, but it might very well play the role of a currency in the future. Even today, it is used in multiple industries (such as jewelry) and as a reserve asset by Central Banks across the world.
In comparison, Schiff argues, Bitcoin is more like a commodity or a digital asset. It can be traded between individuals like barter transactions. Moreover, Schiff asserts that Bitcoin cannot be used as a medium of exchange in the future, or as a reserve currency by Central Banks across the world.
Additionally, Schiff stated that claims of Bitcoin’s rise, despite the downward market trend in the wake of coronavirus, were utterly baseless. Although Bitcoin prices may have increased initially, it had depreciated considerably – even more than the risky assets on the Nasdaq or Dow Jones indexes. Schiff saw this as a clear indication that Bitcoin was not a superior store-value asset or digital gold.
Bitcoin promoters claim #Bitcoin has proven itself to be superior to #gold as a safe haven and store of value. This is nonsense. Bitcoin hasn't been around long enough to prove anything other than P.T Barnum right. There's a sucker born every minute and many of them own Bitcoin.
— Peter Schiff (@PeterSchiff) February 25, 2020
At this point, Schiff brings up Pompliano’s CNN interview wherein he stated that Bitcoin was a non-correlated asset as proof that Bitcoin enthusiasts acknowledge that the digital coin is not equivalent to digital gold.
?Bitcoin pumpers forced to admit it's not digital gold – Ep 537: https://t.co/JIdaMx4iek
— Peter Schiff (@PeterSchiff) February 27, 2020
Subsequently, Schiff highlights that Bitcoin’s prices are incredibly volatile since they are necessarily based on its supply and demand. Unlike gold, Bitcoin’s demand is not tied to any tangible use of the commodity, implying that it can suddenly fall, causing its value to crash.
Gold is a Safe Haven, Lives Up to its Reputation
Schiff reiterated his belief in gold. He argued that gold was an alternative to currency because it offered liquidity.
The economist discussed the continuing downward trend of the U.S. stock market. Nasdaq and the Dow Jones index are down for the 6th day in a row. The market was down by three percent for two consecutive days, perhaps for the first time since the great depression.
Despite the entire market being significantly down, gold prices are steadily rising at $16.40. Although the gold market was slightly volatile and dropped by $20 at one point, it gained by two percent at the close of markets yesterday.
Consequently, Schiff recommends that investors should keep their money in gold rather than in dollars or other currencies. They could store their value in gold, which would guarantee a safe investment and a considerable return, especially compared to the treasury.