DashDude
Active member
Mish (Mike Shedlock) is an influential blogger for investing topics that I typically agree with. However, he recently blogged about the Peter Schiff - Max Keiser bitcoin-gold debate here. He came down on the side of gold so I sent him an email to try to change his mind 
I'll paste Mish's arguments and my responses in red below:
As noted in my clip, I think Schiff is on the right side of the debate. This is my take:
I'll keep you posted if he responds. In the mean time @thedesertlynx or @mastermined feel free to use any (or none) of this to make a DFN article for wider reach if you wish.
I'll paste Mish's arguments and my responses in red below:
As noted in my clip, I think Schiff is on the right side of the debate. This is my take:
- Bitcoins are the new beaver pelts of monetary transactions. For thousands of years, when available by free choice, gold has always been the currency of demand. Things like salt, cigarettes, beaver pelts, and recently Bitcoin, come and go. It's true that gold has historically been the currency of choice. However, the internet changes everything! Fiat currencies are deeply flawed, but can be spent easily online. Gold is good money, but not practical to spend in the digital age. Cryptocurrencies offer the best of both worlds - a form of digital gold that is easier to hold, store, transport and spend - especially online.
- The scarcity of gold is real. The scarcity of Bitcoin is artificial. It depends on trust that a human-based promise to mine more coins will be limited. There are trade-offs with this argument. The gold holding argument requires an element of trust that it will not be confiscated by the government like the US did in 1933 and could well do again in a crisis. It is true that cryptocurrencies rely on an element of trust that the protocol will not be changed in a way that hurts the holders. However, this is not a very likely scenario since the people most able to make these changes are also typically invested most heavily in the currency. They are incentivized to act in the best interests of the currency and its users.
Consider the currency DASH. It uses a Masternode governance system that requires staking 1,000 DASH (~$200,000 worth) to be able to vote on governance issues. This helps ensure that the currency is managed to maximize its utility & value. Inflating the cryptocurrency would destroy trust in it's value proposition so it would not be attempted. Finally, in the event that a cryptocurrency is poorly managed it is a competitive currency marketplace and one can simply switch to another that suits his needs better! - In a currency crisis, liquidity crunch, or stock market collapse, where would you rather be? If you choose Bitcoin over gold, you are not thinking clearly. You are dreaming. In a serious currency crisis I think it is likely that both gold and cryptocurrencies would be targeted by an insolvent government. The difference is that it is much easier to keep one's cryptocurrency investment out of reach of a hostile government than it is to do the same with gold. For the record, I see advantages of both gold and cryptocurrencies and hold both.
- Blockchain does not scale. Imagine the entire history of every transaction of any size, any place in the world, recorded on a distributed network. Bitcoin is going through a big scaling debate currently, but others like DASH have already solved this problem. Please have a look at the DASH scaling roadmap which allows for "Visa level" scaling that is on chain and uses existing technology: https://medium.com/@eduffield222/how-to-enabling-on-chain-scaling-2ffab5997f8b .
Other on chain scaling solutions include pruning, sharding and other compression techniques. Finally, second layer solutions are expected to develop which will also help solve the scaling problem. Banks could easily facilitate crypto payments on their own networks and only use the blockchain for settlement. 20 years ago it would have been difficult to imagine the internet being able to scale to the point where we could watch high definition movies in real time, yet here we are. This problem is solvable! - Despite the hype, no one would use Bitcoin to buy a candy bar. or even a meal at McDonald’s. One might easily do that with Bitgold. Transaction costs are the difference. Here I agree with you. Bitcoin transactions are too expensive and take too long to confirm for retail transactions. Fortunately, other cryptocurrencies like DASH have solved this problem. Transactions cost only pennies and DASH InstantSend transactions confirm instantly!
DASH Evolution due out in 2018 will make DASH as simple to use as Venmo, but with lower fees, no transaction censorship and a sound currency. Don't let Bitcoin flaws turn you away from all cryptocurrencies! Also remember that this is an emerging technology. The internet was difficult and expensive to use in 1992 as well, but is now ubiquitous. - Absurd proclamations and theories about the value of Bitcoin are now commonplace. This is typical of any bubble. I think every truly revolutionary technology that ends up changing the world goes through a manic bubble phase. There have been internet stock bubbles, chemical stock bubbles and even railroad & canal stock bubbles in the 1800s! These were all revolutionary improvements to our quality of life and all went through investment manias. This represents a fault of humans as investors rather than a fault with the underlying technology. Investors need to use common sense!
I'll keep you posted if he responds. In the mean time @thedesertlynx or @mastermined feel free to use any (or none) of this to make a DFN article for wider reach if you wish.
