WBD242 Audio Transcription

Bitcoin vs Gold with Peter Schiff

Interview date: Wednesday 15th July 2020

Note: the following is a transcription of my interview with Peter Schiff from SchiffGold. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this interview, I speak to Peter Schiff, and we discuss what he doesn’t like about Bitcoin, if he sees the alignment between Bitcoin and gold, the properties of sound money and if Bitcoin should be considered a store of value.

“Bitcoin is the new kid on the block, so Bitcoin has something to prove, gold doesn’t.”

— Peter Schiff

Interview Transcription

Peter McCormack: Peter, welcome to the show. How are you?

Peter Schiff: I'm good! How are you?

Peter McCormack: I'm good. It's good to finally have you on, I've wanted you on for a while. I wondered if you know about my show, but you don't because you don't listen to Bitcoin shows, but you did Pomp, right?

Peter Schiff: I did. I did Anthony's show, but I guess it's because he asked me. You asked me too, so that's why I'm doing it.

Peter McCormack: I mean, his show I'd say is a good training for mine.

Peter Schiff: That was the warmup, right?

Peter McCormack: Yeah, that's the warmup.

Peter Schiff: Yours is the real deal?

Peter McCormack: Yeah, his is like junior school and this is senior school. No, listen, I've got lots I want to talk to you about.

Peter Schiff: All right.

Peter McCormack: I'm not a Bitcoin cultist whilst I've got a Bitcoin show. I love Bitcoin, I think it's great, but I'm not a full cultist. I am interested... It's good timing because I'm about to buy my first bit of gold. You know Dan Tapeiro, right?

Peter Schiff: No, who's he?

Peter McCormack: He's another gold guy. I've been talking to him for a while and I've kind of... I'm obviously a Bitcoiner, but I've decided to kind of diversify.

Peter Schiff: Yeah, well you should be buying your gold with SchiffGold. You're having me on the podcast, you're going to get some gold, you might as well get it from me.

Peter McCormack: Do you have the British stuff? Do you do the British sovereigns?

Peter Schiff: You don't need that crap. We could get it, but that's usually overpriced. They try to push those coins on you because they can make more money on them. We could get them if you want them, but you want to buy as much gold as you can close to the spot price. You don't want to pay extra for some fancy coin that people think has some kind of special value, rare or numismatic, but we could get any coins you want, it's up to you. We'll get you the best price that there is. You should also look at gold mining stocks.

A lot of you Bitcoin guys are in Bitcoin because you think it's going to go up 10, 20 times. That ain't going to happen, but that could happen with gold mining stocks. So if you want to really go for the moon, look at the mining stocks. I manage a gold fund, or rather, I have Adrian Day managing it for me. It's the Euro Pacific Gold Fund, EPGIX, EPGFX, it has a couple of different symbols and people can buy it directly on my website at europacificfunds.com or they can go Schwab Fidelity, their brokerage account.

They can buy it, they can talk to my reps at Euro Pacific Capital, but you should really look at that. Physical gold is a conservative, safe haven store of value, going to go up because the dollar is going down. But if you really want to profit from a gold bull market, more than just the gain in the price of gold, take a look at these mining stocks because they have a lot of leverage to a rising gold price.

Peter McCormack: Who are we talking about here?

Peter Schiff: What do you mean?

Peter McCormack: Which mining stocks? Give me your tips.

Peter Schiff: We have a diversified portfolio in my fund, but obviously look, there's the big names that everybody knows, the Barricks, the Newmonts, the Franco-Nevadas, the Agnico Eagles, there's big companies out there. The key is the juniors. That's where the home runs are going to be. You could still make three, four, five times your money, maybe more of these big stocks.

Peter McCormack: All right, listen, look, I've got so many questions, but we've jumped straight into the gold and I was going to start by saying, I think we're on the same team anyway, whether I like Bitcoin or Bitcoin and gold and you just like gold, I think we're kind of on the same team. Do you get that? Do you get why Bitcoiners feel that Bitcoiners and gold bugs are kind of on the same team?

Peter Schiff: Well I don't think Bitcoin and gold are on the same team. I think a lot of the people who are buying Bitcoin, not all the people, but certainly some of the people, probably you, you're buying Bitcoin for the same reason that I'm buying gold. You're buying Bitcoin because you don't trust fiat currency, you're worried about inflation and you want to own an alternative and it's just that you're choosing the wrong alternative. I think that when you're going from dollars or euros or any currency into Bitcoin, you're really just jumping from the frying pan into the fire.

I don't see Bitcoin as money as a long-term store of value the way I look at gold. Also, I buy gold as a way to store my wealth, as a conservative place to keep liquidity, as opposed to keeping it in dollars or some other fiat currency. But I do think that when people are buying Bitcoin, they're really not looking for that. People who are buying Bitcoin are not looking for stability. They're not looking to maintain their purchasing power. Pretty much everybody that I talk to that's into Bitcoin thinks it's going to go up to $50,000, $100,000, $1 million, they think they're going to get rich on Bitcoin. I don't tell anybody they're going to get rich on gold.

They're just not going to go broke with gold. They're going to preserve their wealth that other people are going to lose. I do tell people if they want to try to get rich, they could try gold stocks because that's possible. I think that there's a lot of upside potential there, but it doesn't come without downside risk. It's always a trade off, but gold is a conservative long-term store of value. I don't think that's how Bitcoin is being marketed. I think people are saying, if you want to get out of dollars and euros and yen, buy Bitcoin because you're going to get rich on Bitcoin, because Bitcoin is going to go way up.

Not just because the dollar is going to go down, but Bitcoin is just going to go up. Even if the dollar doesn't go down, it's just going to go way up and so that part of it is very different and that people are buying Bitcoin to get rich as opposed to a store of value. But where I think the Bitcoin buyers and the gold buyers share some common ground is many of the Bitcoin buyers distrust government, distrust fiat money, central banking, the federal reserve, just like gold buyers and many of them are libertarian or free market oriented and see accepting a Bitcoin as a way of rejecting this monetary system that they know is flawed.

Peter McCormack: Yeah, but that's what I mean, we're in the same team again in terms of our fears about the economy and money, and we want this kind of alternative. You're just gold, whereas I'm gold and Bitcoin. Well, I'm going to be gold and Bitcoin. Let me just run a couple of scenarios with you.

Just say hypothetically speaking, because I'm trying to understand some of your thinking, not just because of you, just because of other people into gold as well, but imagine the price of... Is your issue with Bitcoin the volatility? So imagine if Bitcoin was pegged to gold, would you equally dislike it or would you have a different view?

Peter Schiff: It wouldn't be Bitcoin if it were pegged to gold.

Peter McCormack: I know. But just for the sake of the next thing I want to explain just out of interest, if it was, is your main issue that the price is too risky, it's too volatile?

Peter Schiff: Well one of the reasons it's so volatile is because it has no real value, it's just a trading vehicle. But if Bitcoin were actually a digital receipt for gold, if you said, for example, for every Bitcoin that exists, there was an ounce of gold on deposit somewhere, and Bitcoin traded at the price of gold.

So if gold is $1,800 and then one Bitcoin was $1,800 and its value would fluctuate as the price of gold fluctuated. So if gold went down $10, Bitcoin would go down $10 and if the way Bitcoins came into existence was that new gold was deposited into this Bitcoin depository somewhere, and as every ounce of gold was put into a vault, a new Bitcoin was created into circulation that was backed by that gold.

So if you had legitimate cryptocurrency that was called Bitcoin, that was fully reserved and backed by gold, and in fact, if you wanted to, you could take your Bitcoin to that depository and redeem it and get the gold, so it was really a digital warehouse receipt for gold, just like the old blacksmith used to create a paper warehouse receipt, then I would support it to the extent that you could trust the depository, because now you have to make sure that your gold was safe.

So if it was a reputable company and maybe they insured it through Lloyd's or somebody like that, and I trusted the depository, yeah, it would work, but it wouldn't have the appeal that it has right now for people who think they're going to get rich, because the minute you tie Bitcoin to an ounce of gold, then the only upside potential is the price of gold. So you don't have people saying it's going to go to a million dollars in Bitcoin. That's just not possible when it's real.

Peter McCormack: Because the way I see it, I think they're similar, but really just different assets have different trade offs and that's why I want both. The reason I'm buying gold Peter there is, I also want it to be a store of value, but I don't want to buy... Say I buy £10,000, £20,000 of gold, I don't want the spot price to drop from $1,800 to $1,300. I don't want to lose that value because that would be disappointing.

At the same time, I don't want it with Bitcoin, but when it goes to my investment manager, they have these three boxes to tick, there's low risk, medium risk, high risk. So I consider my gold is going to be my low risk and my Bitcoin is going to be my high risk, but I am highly confident that in a year's time that I can sell my Bitcoin, it might be for a higher price, it might be for a lower price, but I just see it as a different risk and I see both of them as different kinds of trade offs.

Peter Schiff: Well I agree with that in that they're very different and they have very different risk profiles associated with them. I think the downside risk is much greater with Bitcoin than it is with gold. If you're worried about whether gold go to $1,300, it could. I think it's unlikely and if it did, I would just buy more because again, we only have an allocation to gold and to the extent that gold gets cheaper in the future, if we want to maintain our allocation, which is buy more to better price.

But given the rate of debasement of global fiat currencies, it seems unlikely that the price of gold would go down that much and if the price of gold went down, probably the stock market would go down more, the real estate market would go down more and so you would still be able to buy more other assets with your gold, even if the price of gold went down because on a relative basis, it would still likely go up. But there is some natural floor for the price of gold. Historically, you can look at gold over the centuries and you can relate the price of gold to other commodities, whether it's oil or wheat or copper, or even financial assets like the Dow Jones and you can see a historic relationship that would let you know when gold is really cheap.

When it is really cheap, buying is naturally going to come in and you have a demand for gold by central banks who have gold as a reserve asset, who would take the opportunity to increase their reserves, given a more favourable price. You have industry demand, that would load up on gold that they need, jewellery industry if they saw a big drop in the price of gold would take advantage of that to buy up some gold so that they can use it to fabricate jewellery in all kinds of industries and in aerospace and consumer electronics, in dentistry, all the real world uses for gold because gold is the most useful and the most valuable metal that we have and so it has all sorts of applications.

Now when the price of gold gets too high, a lot of people who would like to use gold, substitute other metals that don't do the job as good, but it's a trade-off. But if gold comes down in price, all of a sudden, a lot of companies that maybe were using copper will say, "Hell shit, at this price, I'll use gold because it's so much better" and so you get this natural demand from industry and from the jewellery world and central banks that are going to come in that are going to provide some type of floor beneath the price of gold.

That doesn't exist with Bitcoin. Bitcoin is all about what people perceive. There's no real natural demand because you don't use Bitcoin in anything. Nobody even uses it as any kind of medium of exchange. They just buy it because they think it's going to go up and they think it's going to go up because they think somebody else is going to buy it at a higher price.

Peter McCormack: Yeah I agree with you on the gold stuff, but we know the other bits about people not using Bitcoin. We know that's not true now. Yes, we're not buying cups of coffee, but I'm not going to go and buy a cup of coffee with my gold. You've had all these arguments...

Peter Schiff: What are you buying with your Bitcoin? I mean, what are people doing with their Bitcoin other than hodling them or whatever?

Peter McCormack: Yeah, it's a range of things. All my customers are in the US, actually I've got one in Estonia, but two of my customers, I bill and get paid in Bitcoin. It's just easier than doing a bank transfer and it's quicker. So I actually use that for that.

Peter Schiff: In that sense, it's more of almost like a barter arrangement because you actually want the Bitcoin. You're not turning around and then using those Bitcoin to pay your rent or to pay your salaries, you're probably just holding onto them.

Peter McCormack: No, I am. So what happens is, for every invoice I do, I transfer 75% back into pounds to run my business and I leave 25% in Bitcoin for a couple of reasons, for the same reason like you would maybe hold gold and dollars within your business. So it does have a use case there.

Peter Schiff: But again, you are selling the other 75% because you're not running your business with Bitcoin. You're not paying your operating expenses because the other people that you're dealing with, they don't want your Bitcoin. They want the pounds.

Peter McCormack: That's actually not true either. Some of the people I work with do, but that's because we're in this Bitcoin ecosystem, right?

Peter Schiff: Yeah.

Peter McCormack: So some of us are, and it is growing. It's not that I disagree with you, I think you make really valid points, but that aren't entirely correct and have certain truth to them. So for example, when you say nobody's using it, we know that's factually not true.

Peter Schiff: Well let me ask a question on the way you're using it. So you have customers that pay you in Bitcoin. Now are there bills... So have you agreed in advance, like how often do they pay you?

Peter McCormack: Usually quarterly.

Peter Schiff: Okay, do you have a set quarterly payment? That is, so every quarter you give me a 10th of a Bitcoin or is it every quarter you give me 100 quid and then you convert, you figure out how many Bitcoin you need?

Peter McCormack: I don't even figure out the Bitcoin. I send them a Bitcoin address. The invoice has the dollar amount and at the point they do the transfer, they transfer it across using the Bitcoin because that's easier than the bank.

Peter Schiff: So Bitcoin isn't being used as the unit of account. The unit of account is pounds and so you're using Bitcoin more to transfer pounds via Bitcoin.

Peter McCormack: Yeah, definitely. I wouldn't disagree with that.

Peter Schiff: But in order for Bitcoin to be money, people say it's digital currency, it's money, you would have to actually, it would have to function as a unit of account. The invoices and the bills and the contracts would be denominated in Bitcoin, but you can't do that because you have no idea what Bitcoin is going to be worth quarter to quarter. So it's too volatile to be a medium, a unit of account.

Peter McCormack: You can use the same argument for gold. So for example, if I want to...

Peter Schiff: Not really.

Peter McCormack: Well no, it could. So if I wanted to be paid in gold, if I had done my invoice in January, I still would've done it in pounds and they would have paid me in gold.

Peter Schiff: Well you could.

Peter McCormack: And the invoice would have been quite different between now and January.

Peter Schiff: But you could also do it in gold. You could tell somebody every quarter, I want one 10th of an ounce of gold, I don't care what the dollar price is and that would work very well because let's say you have customers...

Peter McCormack: I would've lost money.

Peter Schiff: Actually no, because gold has gone up.

Peter McCormack: Oh yeah, Gold's gone up. Sorry, you're right.

Peter Schiff: But let's say you have customers in 50 different countries, instead of... Because if you tell them to pay you in pounds, they don't have pounds. They're not in the UK and do you really want to have invoices in 50 different currencies? What you could say is, "Hey, I want a 10th of an ounce of gold from everybody. I don't care where you live. Just send me a 10th of an ounce of gold and that's it" and gold is stable enough.

Yes, it may be worth a little bit more, it may be worth a little bit less, but chances are it will be worth more because we're in an inflationary world where central banks are debasing their money. So to the extent that you get gold in the future, it'll probably be worth more than it is in the present. So it might be a bigger issue for the people who are agreeing to pay you in gold. But if they also had a lot of gold, if they owned a bunch of gold, they could agree to those terms because they would be hedged and they would have a lot of gold. People could use gold as money if they wanted to.

It's a long-term store of value, it's stable and it could be a unit of account. If everybody had gold, we could do it. But with Bitcoin, it's impossible because the volatility is too great and the uncertainty for the future price, nobody hell knows. You can't tell me for sure that Bitcoin a year from won't be $100 of Bitcoin.

Peter McCormack: Oh I can and I'll bet you on it.

Peter Schiff: But you don't know for sure, it could be.

Peter McCormack: Look, there's no absolutes in life. You cannot guarantee that for gold, but you're certain it won't be because of everything you've told me.

Peter Schiff: Well gold hasn't been $100 an ounce really since the early 1970s. Bitcoin was at $100, what? Six years ago?

Peter McCormack: Yeah.

Peter Schiff: Who says it can't go back there?

Peter McCormack: But as a percentage of its life, it's a lot further away from £100 than gold is.

Peter Schiff: But since it intrinsically has no value, there's nothing stopping it from going there. If all the people who have so much faith in Bitcoin, if they lose that faith and they want to sell, where's the bottom?

Peter McCormack: Well do you know what? I told myself I wasn't going to get into this kind of interview with you to begin with because actually the first question I wanted to ask you is that have you gotten to the point now with Bitcoin that you refuse to accept it and therefore your mind can't be changed. Therefore, is it pointless even trying to talk about it with you? Or are you open minded?

Peter Schiff: Well it'd kind of be closed minded of me to say that I'm closed minded or maybe if somehow my judgment is clouded, I wouldn't realize that because clearly my mind is always open. If I heard some persuasive argument that I hadn't heard before, or maybe an argument that I've heard before presented in a way that suddenly caused some kind of epiphany for me to go, "Oh yeah, I don't know how I could have overlooked that."

But I think I know all the pro Bitcoin arguments. I've heard them from so many people who have kind of tried to convert me over, because it's almost like when you're in Bitcoin, it's like your religion. People just want new converts. So a lot of people want to get me into the religion of Bitcoin, and I've just haven't been convinced, I haven't been persuaded.

Peter McCormack: I don't want to actually get you into the religion of Bitcoin and I'm not really in it entirely myself and all the Bitcoiners actually hate me and some of the prominent ones blocked me because I don't follow the exact same narrative as them. I am a bit more... I don't know. I have my own criticisms, but let me consider a different way for you. Have you seen the film Ready Player One?

Peter Schiff: What film?

Peter McCormack: Ready Player One.

Peter Schiff: Yes I have.

Peter McCormack: Okay, so you know that film. Let's go on a long enough timeframe on the evolution of humans. There's going to come a time where a lot of what we do is virtual, Elon Musk is going to have us traveling in between planets etc

Peter Schiff: Yes, sure.

Peter McCormack: Would you accept on a long enough timeframe that a digital version of money when we're traveling around in our Millennium Falcons is probably going to be preferred to gold. There could come a time...

Peter Schiff: Well are you talking about digital money that would exist only in the digital world, but not transcend to the real world?

Peter McCormack: I'm talking like a digital gold, everything has been digitized.

Peter Schiff: Right, but if you're talking about, let's say I'm in my digital world and I want to buy a digital home for my digital avatar to reside in.

Peter McCormack: No, I'm talking about real and digital. It's all one thing.

Peter Schiff: Yeah, I don't think you'll be able to use digital make-believe money that's backed by nothing to buy an actual house in the real world. Maybe in a game world that people can transact online in games, in digital money that is specific to those games. But I think that digital money, for it to have value is going to have to be backed by something tangible in the real world to have value in the real world.

Now governments, obviously a government that issues basically worthless paper currency, and just says, "This has value, it's legal tender" and people accept it as legal tender, governments could get away with that by issuing digital fiat currency, just like paper fiat currency so long as people were willing to accept it.

But all fiat currencies eventually collapse, it's just a question of how long it takes. So eventually that type of currency would collapse too. I'm of the opinion that we are going back to sound money again, not because politicians want to, but because they'll have no choice because they will have destroyed their fiat creations. They're going to blow up the value of the dollar and other currencies and everyone's going to back their paper money by gold again.

That's what's going to happen, that's the monetary system that existed for centuries, actually for millennia. The United States kind of got the world to try the dollar standard initially under the promise that the dollar was as good as gold, because it was backed by gold. But once we reneged on that promise and defaulted, the world's kind of been in nowhere land since 1971, kind of with this dollar standard where every currency is backed by the dollar, but then the dollar is backed by nothing.

But if your currency is backed by something that's backed by nothing, well then your currency is also backed by nothing. So we've just had this global fiat system, but it's going to end and I think gold will be re-monetized and that will bring order and stability and trust back to the monetary system. But those currencies that are issued, whether it's by governments or private entities, can be digital, and maybe it would be more efficient if they were digital, but they will ultimately derive their value from the gold that backs them up.

Peter McCormack: So let me try something else. Okay, if I buy gold and I buy Bitcoin, I buy them both to store value and I hold Bitcoin thinking it might go up more knowing it might go down more and I buy gold knowing it might go up more and it might go down more, but it's going to be a little bit more stable, but I expect them both to do similar, just one's more extreme than the other. Does that make sense?

Peter Schiff: Well I think that you expect Bitcoin to go up way more than gold.

Peter McCormack: No, it's not that I do. I think it could, but there's other factors that...

Peter Schiff: But don't you also accept that between the two, Bitcoin has more downside risks than gold?

Peter McCormack: I do, I do think it has more downside risk.

Peter Schiff: So if you think it has more downside risk, but the same upside potential, then why would you buy any Bitcoin? Why won't you just buy gold?

Peter McCormack: Because I think it has more upside potential.

Peter Schiff: That's my point.

Peter McCormack: So what I'm saying, is it's a trade-off.

Peter Schiff: So you're buying gold more of a store of value, but you're buying Bitcoin more of a speculation of a bigger increase in value. So it's not that it's the same motivation behind both. You are expecting a bigger gain in Bitcoin, but you recognize that there's the potential for a larger loss.

Peter McCormack: Yeah, I buy them both for the same reason, to store value, but I have a preference over Bitcoin because I think we're seeing a gradual transition to Bitcoin and therefore there's more likely it's going to go up, but they both have similar scarcity property.

Peter Schiff: Well I don't think it's the same because I think Bitcoin scarcity is man-made. It's kind of an arbitrary scarcity built into the Bitcoin system whereas gold scarcity is natural. There's only so much gold in the world, but the other thing is, see gold scarcity is different in that there is no other metal that has the properties of gold, right?

Peter McCormack: I know where you're going to go with this.

Peter Schiff: But Bitcoin is not unique among cryptocurrencies in that there is no limit to the number of other cryptocurrencies that can provide the same functionality. In fact, many of the cryptocurrencies, there's over 5,000 other ones, but many of the other ones are actually better than Bitcoin. They just don't have right now the level of trust or the user base or the market cap.

But if you look at their security, their speed, and all these other things, they're actually superior to Bitcoin, which makes sense because Bitcoin came first and you tend to improve on things. The first cell phone was not the best cell phone, the first television set was not the best, the first car was not the best. We keep improving. They've never improved on gold. Gold has been here for 5,000 years and nobody's created a better version of it.

Peter McCormack: Let me just jump in here.

Peter Schiff: Let me finish. Anything man can create, man can improve. God created, or the Big Bang created whatever, gold and so gold is not being improved upon, but cryptocurrencies are always being improved upon. So I don't really see a real degree of scarcity. I see cryptocurrencies as infinite in supply.

Peter McCormack: Okay, I'm definitely going to be fair with you, but this is where you are wrong. I'm going to tell you where you're wrong. I'll tell you why. Just let's go with the properties. Okay, so if all metals cost the same price, in every scenario, when you used a metal, would you use gold? Would you build a racing car out of gold?

Peter Schiff: No.

Peter McCormack: Why not?

Peter Schiff: Well because it wouldn't be the right ... I wouldn't build an airplane out of it either.

Peter McCormack: Yeah, exactly.

Peter Schiff: But there are a lot of places where, like in conductors of electricity, inside computers, or a lot of times in dentistry, people don't get the gold crowns because they're more expensive. So they go for a porcelain, but in cases where gold does work better, but its cost makes it not the best choice, in those scenarios, gold is without a doubt, the best conductor of electricity, it would be used in every circuit there was if it wasn't for the high cost.

So to the extent that it was cheaper to use gold, a lot of people would plate their silverware with gold. It looks nice, it's just expensive if all your silverware is plated in gold, as opposed to plated in silver, but you can plate it gold. In fact, you know what happened during the 1960s, when the government was artificially suppressing the price of gold at $35 an ounce, they were using gold all over the place.

It was so super cheap because the government was keeping the price of gold going down while the price of everything else was going up, people started using gold for all sorts of things that they weren't using it for in the past, because it was too expensive to use gold.

Peter McCormack: Okay, but this is where you're wrong, because look, I agree. Gold is the purest best metal, best for conductive, it's a unique metal.

Peter Schiff: And it doesn't tarnish ever, it doesn't rust.

Peter McCormack: But why would you not build an airplane out of gold?

Peter Schiff: Well I think it's too heavy. You need something really light, like aluminium.

Peter McCormack: Okay, so in the area of building airplanes, gold is not the best metal.

Peter Schiff: Yeah.

Peter McCormack: Would you agree with me on that?

Peter Schiff: As far as I know.

Peter McCormack: So what I'm saying is well, you say all these cryptocurrencies, they create better technology, they're faster. So say if I wanted to send you £100 of Bitcoin now, it might cost me £3 and take an hour to get to you or if you had to send me £100 or you could send me the same amount of value in Bitcoin Cash. Very similar, faster and cheaper, why do you think I don't want the Bitcoin Cash?

Peter Schiff: Well because you expect the price of Bitcoin to appreciate more than Bitcoin Cash, I think.

Peter McCormack: No, it's not. It's because I trust the security of Bitcoin better than I trust Bitcoin Cash for a number of reasons. There's lots of different factors that come into play and look, these aren't things that I would expect you to understand, because...

Peter Schiff: Well let me ask you a question then.

Peter McCormack: Hold on, let me finish on this one. This is not that I'd expect you to understand, I don't know a lot about gold and If I'm going to buy gold, I've got questions for you now about the gold I'm going to buy because I've been looking into it and there's things I'm confused about and that's because I don't work on gold all day every day and it's the same with Bitcoin. I've got a Bitcoin show, I would expect I would know more about Bitcoin than you.

So some of the arguments when you make them, I'm like, "Okay, no, that's wrong." So one of the things that's really important for Bitcoin is the number of developers that work on it. Bitcoin Cash doesn't have very many developers, Bitcoin does and it's the quality of the developers protecting the code, it's the hash rate that protects the security.

Peter Schiff: Is Bitcoin of all the 5,000 plus digital currencies, is Bitcoin the most secure right now?

Peter McCormack: By far.

Peter Schiff: What makes Bitcoin more secure than all the other cryptos out there?

Peter McCormack: It depends what measures security, but let's just say primarily it's the hash rate. So it makes it the most difficult to hack.

Peter Schiff: Okay, is it possible that somebody could develop an alternative cryptocurrency that would be more secure than Bitcoin based on hash rates?

Peter McCormack: If you look at the thousands of people who've created cryptocurrencies, if they could do it, don't you think they would?

Peter Schiff: Well I don't know what's involved, but I know that technology improves and things get easier and easier to do, which is another reason why, when you're talking about how secure Bitcoin is, you know how secure it is based on the technology for hacking that exists today, but you don't know how secure it may be in the future when future hacking technology has improved dramatically. The question is...

Peter McCormack: I can make the same argument for you about gold and say, we don't know about the future technology for mining asteroids. Look, if you're honest, you can make similar arguments back and forth. I think you need to be fair.

Peter Schiff: Well I think it's more realistic the way computer speed and all that has been evolving, that it's far more likely that somebody will come up with a way to hack Bitcoin, than that we're going to profitably mine gold from meteors.

Peter McCormack: Actually, I think it's pretty similar and let me tell you why. I've looked into this...

Peter Schiff: Gold would have to be so expensive to even contemplate such a mission, the cost of getting gold from space is... Gold is not valuable enough to make the mission worthwhile. It would cost too much to try to go out and mine... I saw that there were these Bitcoiners that were trying to promote this fake news story about this massive gold asteroid that we were all about to mine and it looked like it had a picture in it.

They made it look like there was all this gold up there, but the whole thing is a lie. They don't know if there's gold up there and no one is about to mine it, not in our lifetimes. It's just not going to happen.

Peter McCormack: Look, I don't think they are. What I'm saying is there is a potential with technology and in the future that it could happen. I'm not one of those people thinking is going to happen in my lifetime and you think there's a potential with technology that you can hack Bitcoin, but we're 11 years in and it hasn't happened.

Peter Schiff: Well no, people have hacked it. People's accounts have been stolen and Bitcoins...

Peter McCormack: No, that's different. We're jumping around. We're not doing each other a just service, but let's just go back a step to where we were, just to be fair, like I'm saying, you wouldn't build an airplane out of gold and I wouldn't receive money via Bitcoin Cash. I think that's the same argument because you're saying, "Oh, there's better technology. It's faster and cheaper, yet people aren't using these other cryptocurrencies for a reason." I get why...

Peter Schiff: Well, some people must be using them. They're not at zero.

Peter McCormack: Very, very low and usually people who are tied to it because they've got an investment in it.

Peter Schiff: Yeah, well you're tied to Bitcoin, you own Bitcoin, that kind of clouds your judgment a bit.

Peter McCormack: A little bit, I wouldn't disagree.

Peter Schiff: There are people out there that are just an adamant that the real Bitcoin is Bitcoin Cash and that's the one.

Peter McCormack: Of course.

Peter Schiff: You don't even have agreement within the crypto community as to which crypto is best.

Peter McCormack: Because I'm not in the crypto community. I'm just in the Bitcoin community.

Peter Schiff: Well, there you go. See, what you're saying is all those other cryptos are worthless, but my crypto, Bitcoin is the one that has all the value. See I don't see the difference between your crypto or any of the other cryptos, any argument that you make against Bitcoin Cash, I think I could just turn it around and make the same argument against Bitcoin. I think they're all the same. Bitcoin just came first, so Bitcoin has...

Peter McCormack: Yes, you're right. But that's a really important point. You are right, it did come first. So it created the trust and there is...

Peter Schiff: Yeah, but Google didn't come first, Facebook didn't come first, what happened to Myspace? A lot of things that...

Peter McCormack: Yeah, but that's such a tired argument.

Peter Schiff: No, things that come first don't necessarily win. Somebody makes something better then that wins.

Peter McCormack: Well you can put it a different way.

Peter Schiff: We don't even know that Google is going to be around in 50 years. Maybe somebody will come up with a better search engine or maybe we won't even need search engines, who the hell knows?

Peter McCormack: Yeah, or maybe the internet won't win. Maybe someone will come up with a better internet.

Peter Schiff: Maybe, I don't know, but I don't think they're going to come up with a better gold because it's been around long enough that at least I have some confidence in that.

Peter McCormack: Well actually you're wrong, because they came up with Bitcoin.

Peter Schiff: No, because Bitcoin's not gold. There's not one real world application where you can substitute Bitcoin for gold.

Peter McCormack: No, I'm just teasing you there.

Peter Schiff: I know, but that's true. People who say it's digital gold, no, it's not any more than a digital house is a house. I can have a digital house in Minecraft. My kid plays Minecraft and they build these really nice houses. They're great, but I can't physically move into it. It doesn't matter. You can have a mansion in Minecraft, but it doesn't matter. It's not in reality. So I don't care what you want to create digitally and pretend it's gold. You don't have gold any more than you have a mansion because you create one in Minecraft.

Peter McCormack: See, I think you have got to that point whereby you can't be convinced anymore, because the arguments you're using, some of them are the same ones you had with Erik Voorhees in 2018. They're provably wrong.

Peter Schiff: No, they're not provably wrong. How are they provably wrong?

Peter McCormack: For example, when we say it's scarce, you say it's man-made, you're absolutely right. It is man-made. Can that 21 million be changed? Yes, it can be, but there's no incentive for anyone to make that change. So it won't happen because it requires consensus.

Peter Schiff: Although it's forked how many times, there's Bitcoin, Bitcoin Cash actually came off of Bitcoin. So did a lot of other coins.

Peter McCormack: But they're meaningless.

Peter Schiff: Well, then why did you fork and create them?

Peter McCormack: I didn't.

Peter Schiff: But who did?

Peter McCormack: Okay, a good example of that is that's like me copying the Windows code and trying to sell PCs. No one's going to buy it.

Peter Schiff: No, but who decided to create Bitcoin Cash? And how did everybody who owned Bitcoin get Bitcoin Cash?

Peter McCormack: That's just an explanation of how the technology works, but it doesn't help us in a discussion about why Bitcoin has value because that's exactly the same argument like I said, is me copying the Apple or the Windows code, creating the computers. No one's going to buy it because it's junk.

Peter Schiff: But there are people buying it. Let's assume that Bitcoin doesn't have 100% of the crypto market, it's got about what, 70% of the market cap? So there are people that are using other ones, that are holding on to other cryptos.

Peter McCormack: Yeah, gold doesn't have 100% of the metals market.

Peter Schiff: No, but it has 100% of the gold market.

Peter McCormack: Well, Bitcoin has 100% of the Bitcoin market.

Peter Schiff: There's no difference really between Bitcoin and these other cryptos. You can interchangeably use them. It's just that you prefer one to the other. It doesn't change the underlying property of a crypto. Again, it's because you can't do anything with it. Let's change it just a little bit...

Peter McCormack: Just a second. You can interchangeably use gold with other alloys. You even said that yourself earlier in the interview, if you're honest, you said that, you said people would use gold if it's cheaper. So I'm just saying there are similarities. If you...

Peter Schiff: No, but you're using gold for something tangible in the real world to make something, to manufacture something, Bitcoin is not a component of any manufacturing process. It's not used to make anything, it's not used to do anything, you just hold onto it just like your fiat money. It's just like you're holding dollars or euros, you don't do anything and you're just holding it. It doesn't have any real value.

Peter McCormack: Okay, but you're an Austrian economist, you believe in production and the value of productivity?

Peter Schiff: Correct.

Peter McCormack: So are you saying there's only value in productivity that creates something tangible?

Peter Schiff: Well obviously it can be intangible to the extent that I can have a computer software program. That's intangible, or I can have music that I listen to, but that music, the act of listening to it, I can sing along to it, I can dance to it, it can improve my mood, it can enhance a party. So I'm using it for stuff.

Software helps me be more efficient, I utilize it in my business, it makes me more productive, it helps me earn more money. So there's a value in that software that I can measure in the way it impacts my productivity or it makes things easier for me to do or operate. Bitcoin isn't used the way software is used. It's not used the way music is used.

Peter McCormack: [Inaudible 00:50:13] is used?

Peter Schiff: No, well...

Peter McCormack: Are bank's not productive?

Peter Schiff: Well banks take deposits, make loans, handle payments, banks do a lot of things. You're talking about the blockchain or whatever facilitates the miners and those miners charge money. Those miners who are making the whole Bitcoin network work, they have a toll. They create Bitcoins out of thin air, there's that inflation and they're basically taking value away from everybody's Bitcoin in order to cover the costs of validating these transactions and keeping this network secure so they have value in what they're doing and they're getting paid and everybody who owns Bitcoin is being taxed by these miners to operate this network.

Peter McCormack: No, that's not fair.

Peter Schiff: If all the miners stopped mining, if there was no more miners, then would Bitcoin networks still work if they all shut down?

Peter McCormack: There won't be no miners because if they stop mining, there's incentive for more miners to come in.

Peter Schiff: No, but now you have miners again, you have to have the miners. Without the miners, nothing works and the miners have to be paid.

Peter McCormack: Yeah, but that's the same as gold. You have to have miners to find the gold.

Peter Schiff: No you don't. You need miners to get new gold. If all the mining shut down right now, if we stopped mining and there was no more gold ever mined, that would actually make my gold more valuable because there'd be no more supply. So we don't need to constantly mine new gold. The whole industry is shut down and it doesn't change the value of the gold that already exists and we can still use that gold, I can still transact in that gold.

Bitcoin needs miners perpetually and these miners need a lot of energy. They can consume tremendous amounts of energy to maintain this system and the owners of the Bitcoin have to pay that tax in order to keep this thing going.

Peter McCormack: It's not a tax.

Peter Schiff: It's a tax on the Bitcoin community because Bitcoins are being created.

Peter McCormack: This is where we have to be fair, it's not, it's a fee, because...

Peter Schiff: Okay, a fee, whatever, but it's a fee you have to pay.

Peter McCormack: Well, it's an important point because I don't have to use the network, therefore, I'm not taxed. A tax implies you can take it from me, even if I choose not to use it. So it's a fee, an optional fee.

Peter Schiff: In order for your Bitcoin to have marketable value, there has to be this network supporting it. If the network shut down, nobody would want your Bitcoin, even if you could give it to them.

Peter McCormack: Being an Austrian economist, you're a believer in the free market being efficient, right?

Peter Schiff: Yeah, in long run. In the short run, people make mistakes. Look at the price of Tesla stock. In the short run, a lot of emotion enters into prices in the short run. A lot of greed and a lot of fear and stuff like that.

Peter McCormack: Of course, but the scenario that you put to me, if everyone stopped mining, is kind of a pointless scenario because it's not going to happen because there's too much money to be made right now. So if half the network went offline, the other half would love it because they're going to make a lot more money. So based on...

Peter Schiff: What if the price of Bitcoin crashed down to $100 a Bitcoin? Is there any money in mining?

Peter McCormack: You're throwing scenarios out there that are really unrealistic. I think for an honest debate, we should stick with realistic ones. For example, if it went back down to $3000 again, I could see that happening.

Peter Schiff: Well, sure. It was there in March. It almost hit $3000 in March.

Peter McCormack: But did the network die?

Peter Schiff: Well it didn't stay down there very long.

Peter McCormack: Yeah, exactly.

Peter Schiff: But what if it went down to $3000 and stayed there? Just like it's been hanging out at $9,000 for the past few months. In fact, for the last year, Bitcoin hasn't gone up, it's actually gone down over the last 52 weeks.

Peter McCormack: We're jumping around again Peter, we're doing that thing where we jump around, we don't make progress. So I just want to go back to your point because you were talking about attacks on the system to use it and I just wanted to go back because you were saying gold's great because it creates tangible things. Then I was like, "Well, so is creating things which aren't tangible, is that not productive use of time?" You know it is because music and software...

Peter Schiff: Although those things wouldn't make good money. Software and music wouldn't make good medium of exchange or a store value like gold, but they're intangible.

Peter McCormack: But PayPal, they don't make anything tangible and I use them to transfer money and I pay a fee for it.

Peter Schiff: Yeah, well PayPal is operating a service. That's not what Bitcoin is.

Peter McCormack: It's essentially a decentralized service. I struggle how you can't see how there are similarities and differences between PayPal. The similarities are, I can transfer you money with PayPal and I can transfer money with Bitcoin, the difference is that Bitcoin is decentralized and PayPal is a company.

Peter Schiff: With PayPal, I can transfer your money in the sense that I can transfer your dollars. With Bitcoin, I can't transfer you money, I can only transfer you Bitcoin. Then if you want money, you have to sell those Bitcoin through a bank or somehow and you have to get the money.

Peter McCormack: I'm going to blow your mind.

Peter Schiff: So I'm transferring you Bitcoin, not money. So there's a difference because PayPal is a direct transfer. I can send money to somebody else. When you have Bitcoin, you can send Bitcoin to somebody else. If they want money, they still have to go buy it and they have to sell their Bitcoin to pay for it.

Peter McCormack: Well my buddy Jack Mallers has created a Zap application called Strike, whereby I can send you dollars and you can receive dollars and it's sent on the Bitcoin network, but we can come by that another time.

Peter Schiff: Right, but how does that affect the price of Bitcoin? Let's say I could use the Bitcoin network-

Peter McCormack: It doesn't matter. I can send you $100 to an app from mine with $100 and neither of us sees Bitcoin and you get $100 quicker than anything else. My point I'm trying to make is, you see gold as money, I see Bitcoin as money, some people see fiat as money, everybody has the right to choose... People in prison see cigarettes as money, we have a right to choose what we want to use as money.

Peter Schiff: Yes and I've heard the argument, but the reason that cigarettes are money in prison is because you can smoke them and there's a lot of smokers in prison who can't get cigarettes. So cigarettes have a lot of value, even for people who don't smoke because they know there's somebody who does. So cigarettes are money because if I don't want to get raped, I could pay off somebody cigarettes and they're great because they're all the same, every cigarette is like every other cigarette.

They're divisible and they're unit of account and you can store them, you don't have to smoke them today. I can hold them for six months and smoke them later, so they work. Nobody would want Bitcoin in prison. You couldn't buy jack in prison with Bitcoin, because if you're in prison for your whole life, Bitcoin ain't going to do you any good. Cigarettes will do you good.

Peter McCormack: Yeah, but cigarettes do you good where money doesn't really do you that good either. It's kind of a similar scenario.

Peter Schiff: No, it's not similar in that Bitcoin doesn't have the use case of a cigarette. You can't enjoy smoking your Bitcoin, but what I wanted to...

Peter McCormack: You can't enjoy smoking your gold. I don't want gold in prison.

Peter Schiff: No, I can enjoy... I can wear my gold here. Look, here's a gold ring, I'm wearing it.

Peter McCormack: You can't jump around. You got to be fair with me, you're not going to wear gold in prison because you're going to have that stolen off you.

Peter Schiff: I know, but I'm not in prison.

Peter McCormack: I'm not in prison. So it's the same point for Bitcoin. What I'm saying is...

Peter Schiff: You can't wear your Bitcoin. You can't make a cell phone with your Bitcoin. You can't fill your tooth with Bitcoin.

Peter McCormack: I'm not trying to convert you into Bitcoin, but what I'm trying to do is maybe make you understand that it definitely isn't worth a zero and the reason being is like, Austrian economics was new to me. I had never heard of it before Bitcoin. I've learned a lot about why productivity is important, especially during these times of crisis with stimulus packages.

I think it's even you, I heard talk about we're giving people money and they're not doing anything productive for it and when you talk about gold being, "Oh, it's tangible", you imply that things that are intangible have no value. But when you...

Peter Schiff: No it's not intangible, it's something that has no use.

Peter McCormack: But it has a use.

Peter Schiff: Bitcoin needs to have a use case other than using it as a store of value. You have to have some underlying value to store, to be a store of value. So you have to have an alternative use other than simply I'm holding it as a store of value. So what is it that people need Bitcoin for in the future? See the reason gold is a store value is I can take my gold today and I can make jewelry out of it or I can use it in electronics.

But what I can do is instead of doing that, I can have it in a coin and in 100 years, somebody can take that coin and melt it down and make jewelry out of it or make a conductor out of it or put it into a rocket ship, whatever they want it for. So all of gold's properties that make it a valuable metal in the real world for industry, those properties can be stored in a coin indefinitely because gold doesn't rot, it doesn't decay or go bad.

Other things will perish, I can't store them for hundreds of years. They're going to go away, but gold is eternal in that sense. So Bitcoin, yes, I can store my Bitcoin. I agree that you can keep a Bitcoin and assuming the network is still in place, that it'll be there in 10 years or 20 years, but what exactly is the use case that I'm storing? What is somebody going to do with that Bitcoin in 10 years?

Peter McCormack: It's a good question. So let me give you some scenarios and then I'll tell you the scenarios and you tell me if you think they're real or not. So what about people who want to buy drugs online and they don't want to get caught? Outside of the ethical thing, you're a libertarian, so it shouldn't matter to you anyway, but what about people who want to buy drugs online and have done many times using Bitcoin?

Peter Schiff: Well from what I hear, they'd be better off maybe using Monero or something like that. People keep telling me that it's easy to track Bitcoin and if you try to buy drugs with Bitcoin, you could get caught because they could use the digital prints that you leave by using Bitcoin to get you.

Peter McCormack: But that's not true. So I've bought a lot of drugs Pete, back in the old days, not now. I've bought a lot of drugs online with Bitcoin and I've never been to jail. See I'm just asking you, do you see that use case?

Peter Schiff: Okay, if what you're saying is true, that the authorities will not be able to get hold of your wallet information or your computer or if they won't be able to track you, assuming that Bitcoin really was truly anonymous, it could have value as a money laundering system, just like any other money laundering, because whatever you launder money and you pay somebody 20% or 30% of your money to launder it. 

So if I'm going to use Bitcoin as a money laundering facility, could it have some value for that purpose? The answer would be yes, but then the question is, what is that value? How high should a Bitcoin be that is really the exclusive province of money laundering? What the money launderers are using Bitcoin for is a conduit because ultimately the money launderer doesn't want Bitcoin. He just wants to use Bitcoin to get in and out of the real world of fiat currencies because I don't see an exclusive world that operates only in Bitcoin without an on and off ramp.

If you're saying that you're stuck with Bitcoin and you have to, so now if the criminal wants to buy something, he has to find somebody who wants his Bitcoin, that's going to be very difficult. Especially if a lot of people started using Bitcoin in criminal activity, they would really crack down, the authorities would crack down on any financial institution that even touched Bitcoin. They would make it so hard nobody would want to deal with it.

So if you came to a bank with Bitcoin, they would refuse to turn it into money and they would refuse an account for any company that was even involved in Bitcoin. So they would drive the whole thing underground. So with all the underground economy, could it have some value there? Sure, I just don't know what, but I think that value is lower than the current price.

Peter McCormack: Well bear with me, hold on. This is almost why I think you're really anti-Bitcoin now because if I raise something, I'll get 20 objections against it and it's very difficult to have a debate when that happens. But all I wanted to say is, again, if I can't buy drugs, but if I can buy them online with Bitcoin, do you see the use? Do you see the value?

Peter Schiff: Well you can buy them online with Monero or other currencies too.

Peter McCormack: Yeah, but I choose not to because I don't... All I'm saying is, do you see that use case? That's all I'm asking.

Peter Schiff: I just said that if it really was anonymous, then I would see a use case, but what is that use case worth? I don't know.

Peter McCormack: Yeah, I don't know on its own. Let me give you another one. If you were in Zimbabwe now, what is it, 800% inflation? But you're poor, you've got $10, $20 that you're earning, you want to get out of it, would you rather hold Zimbabwe dollars or Bitcoin? Answer me.

Peter Schiff: Well you're acting as if there's just a binary choice between those two. But the problem is even if I chose Bitcoin and I put my $20 worth, what could I do with it? The transaction costs would be prohibitively expensive for small amounts of money. If I want to pay somebody $1, it's too inefficient and too slow and too costly. So for somebody who's just got $20 bucks, Bitcoin is not a good way to go.

Peter McCormack: Again, you can get away from those...

Peter Schiff: I would rather get silver coins or even copper. I don't think Bitcoin is going to be a good viable solution, but the guy has other choices. I'd rather have dollar bills as bad as dollar bills are, if you're in Zimbabwe, you can get dollars, you can get euros, you can get pounds.

Peter McCormack: I would like that too, but the dollar bills have been banned in Zimbabwe...

Peter Schiff: You think the average guy in Zimbabwe then, does he have the smartphone? Does he have all that technology?

Peter McCormack: Yeah, they do actually these days.

Peter Schiff: He can't get a smartphone, but he can't get a dollar? He can't get...

Peter McCormack: Well, I think all the dollar apps have been banned, but I'll give you another scenario. So say in Iran, during a very inflationary period, people are able to transfer Bitcoin to their relatives, into the country whereas they have not been able to transfer dollars in due to the sanctions as such, but there was a way of being able to transfer Bitcoin...

Peter Schiff: Look, as a way of evading government sanctions, there could be some value there, depending on how much the government ultimately cracks down on it. But of course, there's also the risk that while you're transacting Bitcoin, the bottom can drop out of the market. Here's the question I wanted to ask you.

Peter McCormack: Yeah, you ask me.

Peter Schiff: Over the last year, we have had an unprecedented confluence of events that could not be more bullish for the argument of why you should be in Bitcoin. We've had this massive pandemic, financial collapse, global recession, money printing like we've never seen, Fed back at zero, QE4 bigger than 1, 2 and 3 combined, endless deficits as far as the eye can see, multi-trillion dollar deficits, money printing, civil unrest, protests, all this stuff has happened and in that environment, the price of gold has continued to rise to hit a nine year high and it's gone steadily up.

Yet in that same environment, the price of Bitcoin has not gone up at all. In fact, it's gone down a bit. Now, if all this is not going to drive the price of Bitcoin up, what will? If it can't go up on all this good news, doesn't that tell you that there's a real risk that it's going to come crashing down?

Peter McCormack: Well it depends on your timeframe.

Peter Schiff: No, the timeframe where all this stuff is happening, all this very bullish stuff in the last year that has happened, that should have sent the price of Bitcoin higher, but failed to send it higher.

Peter McCormack: Again, it depends on your timeframe because what was it you were warning other people about in 2007, 2008?

Peter Schiff: I was worrying about the financial crisis.

Peter McCormack: So you could easily argue over timeframes. I've noticed you do this on Twitter. You can be very picky with your timeframes, but you could argue that this is just a different timeframe that different people are playing at, that people are expecting Bitcoin... Someone like me expecting fiat currency to go bankrupt and we're just buying over a different timeframe over the timeframe from the last financial crisis, Bitcoin's going up a huge amount...

Peter Schiff: It didn't exist...

Peter McCormack: It came into existence because of that and then it's grown because over that timeframe, people have bought into it and they're using it as a defence against government money printing over a longer time. I think picking timeframes is... It's very easy for you to pick a timeframe that looks bad for Bitcoin and I can pick...

Peter Schiff: Well I'm not talking about whether it looks bad or good. It's just given all that's happened recently, if this good news hasn't been enough to send the price of Bitcoin higher, what's it waiting for?

Peter McCormack: Do you know what I think it is? I just think it's too new for people. If I went on to my Facebook, not my Twitter, because that's all Bitcoin people. If I went onto my Facebook and said to my friends, we're going through QE4, massive amounts of government printing, higher risk of inflation, what are you doing to protect yourself? Are you buying Bitcoin or gold?

They'll probably be out of the thousand, I reckon two might say Bitcoin and probably two might say gold. I think it would be very even because what I actually think is that I don't think retail is particularly educated to the risks, even with gold. But what I think actually happens...

Peter Schiff: Are you telling me, with all this publicity that Bitcoin has had over the last several years, way more publicity than it had in the early years, I can't turn on CNBC without a discussion of Bitcoin, every institutional investor, every hedge fund, everyone around the world knows that Bitcoin exists and it's not like they haven't discovered it yet. We all know about it, when did you think that to the extent that somebody was going to buy into Bitcoin, they would have bought it already, given all the information that's already out there about it?

Peter McCormack: Well just to finish answering your previous question, I think one of the reasons gold is going up right now is I think institutions understand the need to get out of cash. They understand some of the different risks in the market and they know the history of gold. So it's a bit more reliable, but I also know some institutions are binded to Bitcoin. I just think Bitcoin is a bit too new still for people and it's too confusing and people don't understand it. So I think that's probably one of the reasons...

Peter Schiff: Well, if it's confusing and it's hard to understand, doesn't that destroy the case? It's supposed to be easy. That's supposed to be the selling point for Bitcoin.

Peter McCormack: Actually, it's not the selling point. Once you understand it, it is easier to buy than say gold, but it isn't easy. It's a new form of ... When you first hear about it, I was probably like you, "What? This is decentralized, there's nobody managing it?" It takes a long time to get your head around it. But what I think it is, it's just too new for people and I think it's the same reason people aren't even buying gold. I don't have as many friends buying gold.

Peter Schiff: I think people aren't buying gold, not because they don't know about it, they just don't think there's a reason to, they just don't understand inflation or the risks that are out there.

Peter McCormack: It's the same argument for Bitcoin though Peter. I think it's exactly the same argument.

Peter Schiff: No, but I'm saying that people right now who are worried about inflation and worried about fiat money aren't buying gold because the price of gold is going up. They're just not buying Bitcoin, because Bitcoin's price is not going up.

Peter McCormack: But who are those buyers? Are they all new buyers or are they institutions or governments?

Peter Schiff: Who knows who they are? Let me ask you this. All right, in your mind, is there any kind of price or time component where you're going to say, "Okay, it's not working." If Bitcoin is at the same price in five years as it is today and gold is $5,000 and Bitcoin is still $9,000, would you say, "Maybe I've held it too long, I'm looking at someplace else" or is there a price point?

Let's say Bitcoin goes to $1,000 in the next 6 to 12 months, would you say, "Crap, I'm wrong? Let me get out because at least $1,000 is better than nothing." Is there any amount of time or any low price that would cause you to say, "Okay, I guess it's not going to happen and I'm out."

Peter McCormack: It's a really good question. Okay, let me answer the first part. If in five years time, Bitcoin's the same and gold's five, I'll be like, "Well, I'm glad I bought a bit of gold, I wish I'd have bought more." But I'll be glad my Bitcoin hasn't lost value because we know over that five years, the value of fiat is likely to drop.

Peter Schiff: If Bitcoin stays the same, that means it's lost some value too.

Peter McCormack: Sorry, if you were saying it's exactly at the same price.

Peter Schiff: Yeah.

Peter McCormack: Okay, fine. I would have wished I'd have bought more gold. I wish I'd have bought more gold, but will I think it's failed? No. I can ask you the same question. Is there a timeframe Peter, where you think you've got it wrong with Bitcoin? In five years time, Bitcoin's worth $15,000 and gold still at $1,800, is there a time when you ever look and go, "Oh, I've got this wrong, because I think I'm willing to admit I'd be wrong."

I don't think you are because I think you've taken such a firm position against Bitcoin now I think your ultimate goal is to argue against it rather than ever to maybe see... Because I think I put some pretty rational arguments...

Peter Schiff: Peter, it's not about... Gold is different because gold has been around for thousands of years. So gold doesn't need to prove that it's a long-term store of value or that it's money because it's functioned as money for thousands of years, it's a better store of value. Bitcoin is the new kid on the block.

So Bitcoin has something to prove, gold doesn't. So that's why I'm saying to you, what would have to happen for the experiment in Bitcoin to be a failure in your mind? If Bitcoin went to $1,000 in the next 6 to 12 months, is that a failure or are you still saying it's a success story and people should keep buying it?

Peter McCormack: Again, it's a tough question to answer, but I obviously would be very disappointed if it did and it would challenge my thesis a lot and I would... I guess it's one of those things whereby you don't wake up. I'm not going to wake up really likely that's be $1,000 in one day, but I'm likely to witness it go down and look, if it went down to $5,000, I might go, "You know what, I should sell a bit here." It might worry me.

Peter Schiff: See, what I think would happen is I think it would worry a lot of other people. See I think the main demand for Bitcoin is based on the fact that the people who got in really early made a fortune and what motivates a lot of the new buyers is the belief that there's a bigger fortune coming. They're still getting in on the ground floor, that it's going to go to a million and so...

Peter McCormack: I agree though. I don't disagree. I don't think it will go to a million...

Peter Schiff: Because I think when the price really collapses, you lose all those buyers. In fact, they're going to sell in disgust because they just lost their life savings and now they're going to get out and now they're never going to go back to Bitcoin again and now the whole brand is going to be tarnished because all these people lost all this money in Bitcoin and it's going to be hard to regain that lost luster and it's just, I think that's going to be the end of it.

Peter McCormack: That happens with the stock market, that happened during the dot-com bubble, people make and lose money on investments. I just think they understand it's a different risk...

Peter Schiff: There's a lot of novices, a lot of millennials, don't have much experience that bought into this. I don't know, I think it's a different one, but I got to run. I got to...

Peter McCormack: All right. Let me ask you one more question before I go. One more question before I close out. We'll have to do this another time because I didn't touch any of my questions about Austrian economics, libertarianism, the economy. Let me ask you one more question.

Peter Schiff: All right. Well call me back, go ahead.

Peter McCormack: Okay, is there any part of the arguments I've made to you today that have made you go, "Okay", have I made any fair arguments where you've thought... Because it feels like you've just been defensive, but I felt like I'd put some good rational arguments to you.

Peter Schiff: Well look, the only argument that really makes sense and maybe your argument could be a part of that, is that people say, look, is it possible that enough other people could decide to buy Bitcoin that the price could go up a lot? I will concede that that's possible. I am not saying that $20,000 Bitcoin again, or even $50,000, Bitcoin is impossible. It could happen. Do I think it's likely? No. Do I think the risk reward is worth the gamble? No.

People say, "Well, why don't you just put 1% in Bitcoin just in case?" And you know what, I'd rather just throw another 1% in mining stocks, just in case. I just think that the upside is more realistic and the downside is actually less, but it could happen if enough people decided to buy it. But what I keep thinking about is if a lot of people were going to buy Bitcoin, they would have already bought it. If a lot of hedge funds and institutions were going to go into Bitcoin, they'd already done it.

Oh, Paul Tudor Jones, that's one guy and I don't even know how much he's actually bought and for all I know he's already dumped it. The guy is a trader, he's not a long-term buy and holder. He was like, "Hey, I think this might go up, so I'm going to buy it." If it doesn't go up, he's going to sell it, that's how he operates. So I just don't see it and I hear a lot of people saying, "Oh wait till the brokerage community, wait till brokers start recommending that their clients buy Bitcoin."

I can tell you as a broker myself, that will never happen. Even if you're a broker who believes in Bitcoin personally, you will buy it for yourself. You will never recommend it to a client because your firm would fire you on the spot because there's too much liability. You tell someone to buy Bitcoin and it goes down, you're going to get sued eight ways from Sunday in arbitration. It is too risky for any financial guy to ever recommend it to anybody. So it's never going to happen.

Peter McCormack: Right tell you what, we're going to schedule a part two and we're not actually going to talk about Bitcoin until we do all the other stuff, because I had all these questions about gold! Right, listen, I'm going to send an email, we're going to book a part two and we're going to do the other bit as well. But look, I've enjoyed this, you've made me sharpen my tools. I think you're wrong on some bits, but we'll come back to this. Appreciate your time Peter!

Peter Schiff: I'm sure we agree on almost everything except Bitcoin.

Peter McCormack: Well, we're going to get there. Take care, man. We'll chat soon!

Peter Schiff: Take care!