WBD396 Audio Transcription

Bitcoin Risk Assessment with Lyn Alden

Interview date: Friday 10th September

Note: the following is a transcription of my interview with Peter Schiff & Greg Foss. 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 host a debate between gold bug Peter Schiff and Bitcoin Strategist Greg Foss. We discuss the value of bitcoin & gold, risk management & portfolio allocations and how bitcoin is helping oppressed people around the world.

“I still view Bitcoin as being the best asymmetric return opportunity I’ve seen in 32 years of managing risk. That doesn’t mean I don’t own gold.”

— Greg Foss

Interview Transcription

Peter McCormack: Peter, good to see you again, how are you?

Peter Schiff: I'm well, how are you doing, Peter?

Peter McCormack: I'm doing very good.  I think it's quite a good setting for this, because I'm actually out in El Salvador at the moment, which is relevant to the topic today.

Peter Schiff: Oh, yeah, poor El Salvador; about to get a lot poorer.  You guys really suckered El Salvador already!

Peter McCormack: Well, we will see about that one.  Greg Foss, my buddy, I saw you about a week ago, didn't I, in Boston; how are you?

Greg Foss: I'm well, thank you.  Nice to meet you, Peter Schiff, and thanks, Peter McCormack, for having me.  I'm a Canadian, Peter Schiff, I'm a Canadian but I'm in Maine right now.

Peter Schiff: Oh, all right.

Peter McCormack: Do you want to give Peter a little bit of your background and your entry into Bitcoin so he understands a little bit about you, because you know Schiff?

Greg Foss: Oh, sure, absolutely.  Well, I started watching Peter in the late 1990s while I was working on the sell side of the street.  I was a high yield bond trader, Peter.  I worked on the sell side of the street for about 15 years for TD Securities on both Bay Street and Wall Street.  Then I switched to the buy side.  I worked at two different hedge funds, particularly the second one over the Great Financial Crisis, so credit-focused hedge fund.

I found Bitcoin in 2016.  I followed your advice on gold over a period of time; I followed your thoughts on Bitcoin; and I'm here to maybe take the other side of the argument on a friendly basis.  This is not going to be confrontational, I hope, but we're all big boys in the room, so I look forward to our conversation.

Peter McCormack: Well, listen, we're all fans of Peter Schiff; we've all learned a lot from you historically, especially some of your analysis during the 2008 Crisis.  Also, I got to meet Spencer, by the way, I got to meet Spencer at the Bitcoin Conference in Miami, so I just want to commend you.  You've raised a very smart young man there, he's an impressive guy.

Peter Schiff: Probably not smart enough!

Greg Foss: Hold on now, Peter, I sent him Bitcoin for his birthday and he acknowledged my gift, and that's the only time I tweeted that you've acknowledged by presence.  You called me out and said I'm a knucklehead for sending your son a birthday gift, but I still feel good about it; I think he's done okay, so I agree with Peter McCormack, he's a great young man!

Peter McCormack: Well listen, Peter, the last time we spoke was July 2020.  Gold was at $1,840 an ounce and Bitcoin was at $9,500.  Today's prices, gold is $30 lower-ish, $1,800-ish, and Bitcoin's at $50,000.  So, it's a 425% increase.  I know you don't think that matters, so the way I'm going to manage this is I'm going to just do my best to moderate.  Everyone knows my show's a Bitcoin show.  I've got the Bitcoin version of your show, essentially, so I do have a bias, but I'm going to try to be as impartial as possible and just moderate the conversation.

I'll try and avoid people talking over each other and give everyone a fair chance to answer, but I think a good starting point is just to give each of you three or four minutes, as you need, to outline your case on the subject at matter today, and I'll let you go first, Peter.

Peter Schiff: Yeah, well first of all, I don't think that price is really relevant to the discussion.  I mean, sure, Bitcoin has gone up more than gold during that timeframe, it's gone up more than a lot of things, but that doesn't mean that Bitcoin in any way compares to those other assets that didn't have the same type of price appreciation.  In fact, if price appreciation is your barometer, then Ethereum is way better than Bitcoin.

Since we met, last we were together, Ethereum has gone up a lot more than Bitcoin.  In fact, I think since Ethereum was first started six years ago, I think if you just sold all your Bitcoin and just put it all into Ether, you'd have more money today.  So, you can't just say, "Whatever goes up the most is the best", or you're going to have to change the name of your podcast to What Ether Did!  And, in fact, I haven't really listened to the podcast.  I always imagined it was a very short podcast, because all you'd have to say is, "Bitcoin went up.  Tune in again tomorrow".  I mean, that's what Bitcoin did.

But one of these days, it's going to stop going up and it's going to come down and so will Ether and so will -- there's almost 12,000 of these things now.  I mean, you worry about inflation; look at inflation in cryptocurrencies.  They continue to come up with these one after another.  The supply's going to get bigger and bigger and bigger.  And now, it's not just cryptocurrencies, you've got NFTs.  You've got all kinds of worthless things that people are buying, and eventually the supply of nothing is going to exceed the demand for nothing.  And, eventually the people who are buying nothing are going to decide they want something for their money; they don't want to just buy nothing.

Although what they are buying is a pipedream, they're buying the dream that they're going to get rich.  And one of the reasons that dream is so appealing is that some people have already gotten rich, based on the fact that Bitcoin is $50,000.  There are a lot of people who bought it at much lower prices who got rich selling it as these prices.  Or, some of them aren't even selling, they're just borrowing against their Bitcoin, just the way people were borrowing against home equity during that bubble. 

That happens during a lot of bubbles; people don't want to sell, they're afraid to sell, because they're afraid of missing out on all the gains, but they want to spend some money, they don't want to be stuck in their parents' basement.  Bitcoin millionaires don't even have their own place, but now they're able to go out and borrow some money, because they can loan out their Bitcoin, because there's demand for the Bitcoin right now, because there's so much speculative trading going on.  But what isn't happening in Bitcoin is legitimate commerce.

The people that came to me ten years ago and told me that, "Hey, gold's no good, because you can't buy a cup of coffee with gold, but you can buy a cup of coffee with Bitcoin"; no, you can't, you can't buy a cup of coffee with Bitcoin.  In fact, it's probably easier to buy it with gold than with Bitcoin.  But despite the fact that people aren't buying coffee with Bitcoin, they're speculating on it, they're trading it, they're collecting them; and, yeah, the price is going up, but eventually the price is going to crash.  I don't know exactly when, but I'm confident that that's what's going to happen and a lot of people are going to be very disappointed to see all those paper profits evaporate.

Peter McCormack: Well, I agree with you; price appreciation alone doesn't count.  Did you want to mention anything about gold at all; you didn't mention anything there?

Peter Schiff: Well, I mean look, the thing about gold and Bitcoin is Bitcoin pretends to be digital gold.  I mean, that's part of the marketing spiel of Bitcoin that, "Hey, Bitcoin is better with gold", but it's got nothing in common with gold.  Gold is a commodity, gold is a metal, Bitcoin is neither.  I mean, Bitcoin is just a digital token, it's something that people speculate with.  Gold is not a speculative asset.  Gold is a conservative safe haven store of value. 

So, the conversation really shouldn't be about Bitcoin versus gold; it should be Bitcoin versus Ether, or one of the other 12,000 cryptocurrencies, or should I buy Bitcoin or an NFT, or maybe a meme stock.  What should I gamble on; where should I try to bet that other people are going to come in and pay a higher price?  Gold is the opposite of what Bitcoin is. 

Bitcoin is not a store of value, because there's no value there to store.  I mean, Bitcoin has a price and when you're buying Bitcoin, you're just speculating that the price goes up; you're not storing anything, you're not conserving anything.  Gold is a store of value, because gold is a metal that is used throughout the economy, throughout industry.  There are lots of uses for gold.  There are probably many uses for gold that haven't even been developed yet, but may be developed in 500 years or 1,000 years, and they'll use the gold that we have right now that we're storing, that we're not using, because gold doesn't erode, it doesn't tarnish, it doesn't lose any of its properties over time, so it's the ideal store of value.  And, it worked great as money for thousands of years.

We're not really using it as a monetary unit today.  It's more used as a metal, but it is also used as a store of value.  But I do think one day, it will be remonetised.  I think we will be using gold as a medium of exchange, as a unit of account, as we have in the past; but I think what will be different about a future gold standard than a past gold standard is I think most of the gold transactions will take place through the internet, either through a digital currency that is backed by and redeemable in gold, or through other companies where gold is stored with a reliable vault or bank or a private company that can make that gold available through digital transactions.

That's where paper money initially came from.  People were using gold as money, but it was inconvenient sometimes to carry around a lot of gold, or to use gold for smaller transactions.  So, you would take your gold to a goldsmith, and later a bank, and they would give you a warehouse receipt, which is called currency, and so you could transact in the currency.  But what gave the currency value, because it was just made of paper; what gave the currency value is that it was an IOU for actual gold that was on deposit someplace else.

Well, in the modern world, instead of having a piece of paper that evidence is ownership of gold that you transact, you can have a digital version of that piece of paper that evidences ownership and transact in that.  Then, you can use your gold to buy a cup of coffee, because you can break down an ounce of gold into fractions of a gram.  And, it works a lot better than the cryptocurrencies, because you have something of real value, and then you can actually price goods and services in it, it can act as a unit of account, it can do exactly what it did in the past in the future, except it can do it more efficiently because of today's improved technology that makes a gold standard even better now than it was in the past, and it worked great in the past.

Peter McCormack: Okay.  That point you make that a cryptocurrency backed by gold, is interesting, because it shows at least you understand the tech side of things; you're not against the tech side, it's more where the value is created.  I do just want to correct you on something: nobody's buying coffee with Bitcoin.  I bought this cup of coffee this morning from the café here with Bitcoin on the Lightning Network.

Peter Schiff: Well, how much did the transaction cost?

Peter McCormack: Well, it's close to zero, because I used the Lightning Network.  So, the Lightning Network is a layer 2 technology, so it probably would be significantly less than me using Visa.

Peter Schiff: But the coffee merchant, what's the store?  The guy collects Bitcoin and wanted some Bitcoin?

Peter McCormack: So, he allows you to pay in dollars, in cash, use your card, or Bitcoin and he keeps a certain amount in Bitcoin and he keeps a certain amount in dollars to run his business.  The girl who works on the counter is quite interesting, because she gets paid in dollars and she just keeps all her tips in Bitcoin.  But it was more just correcting that point where you said no one's doing it, because they are doing it.

Peter Schiff: Yeah, well I'm surprised you're -- well, if you think Bitcoin's gone up so much, why do you want to exchange it for a cup of coffee; wouldn't you want to use your fiat?

Peter McCormack: Well, I've got a good amount of Bitcoin now, so spending $2 or $3 of Bitcoin is a rounding error in terms of the amount I own.

Peter Schiff: Right, so you've got enough of it now that you're able to spend it.

Peter McCormack: Well, it's another slight difference though is also when I flew over, I didn't have any dollars on me.  There isn't a cash machine where I am in El Zonte, so it was just a lot more convenient.

Peter Schiff: Oh, that's right, you're down in El Salvador now, yeah.

Peter McCormack: So, it's a lot more convenient.

Peter Schiff: So, it's an El Salvador coffee shop that's taken the Bitcoin.

Peter McCormack: Yeah.

Peter Schiff: Oh, okay.  Yeah, yeah!

Peter McCormack: But the point being, it's just a correction on that nobody is, because they are.  Okay, that was a good intro.  Greg Foss, over to you; you can jump in and do your opening remarks.

Greg Foss: So, I'd like just to state that while the narrative sometimes is that Bitcoin is digital gold, I prefer to think of it actually, Peter, as digital energy; or more exact, encrypted energy.  I'm an engineer at the undergrad level.  The first law of thermodynamics, conservation of energy, runs deep in my veins.  If you think of Bitcoin as digital energy and the ability to store energy over time and space, I think that will clear up the narrative that it has no value.

Peter Schiff: Well, I didn't know that it stored energy.  So, can I drive my car on Bitcoin?  I don't need a gas station; I can just hook my cell phone up to the car and it's going to suck out the Bitcoin and I can drive around; or I can power my house with Bitcoin?

Greg Foss: Yes, you can, sir, yes you can.

Peter Schiff: How?

Peter McCormack: Guys, guys, I'm going to interrupt very early and say these debates always fail when people talk over each other.  So, I will direct to each other, these are opening remarks for Greg; he was very patient.

Peter Schiff: All right, I was just curious how it was energy.

Greg Foss: We'll get to that, Peter, we'll get to it, but here's the thing.  So, if you think of it as encrypted energy, we all know that every advancement in human productivity is accompanied by an increase in energy efficiency or energy productivity.  I believe Bitcoin to be that case.  I am not an anti-gold.  I understand your arguments for gold.  Gold worked well for 3,000 to 5,000 years; it demonetised silver.  The countries that stayed on the silver standard were notably disadvantaged when the world moved to a gold peg.  And everything that you said is true about fiat currencies when they're backed by gold, but that stopped.

So, I think as common ground between the two of us, we'll both agree that the fiat currency is currently a Ponzi.  And you argue that you shouldn't look at price.  Well, I'll be an open-market participant and I'll say that prices are truth, and at any given point in time in the present, the price is the most important point of information you can disseminate from a market.  And Bitcoin, very simply, is trading for a value, to make the maths simple, of $50,000 a Bitcoin.  You argue that it's got no value; I would argue the reverse.  I would say that while it's encrypted energy, the value of Bitcoin, much like the value of gold, is that it's the anti-fiat.

I'll say that the value of Bitcoin is the network, the ability to transfer value over time and space, and it will settle in ten minutes, much like when I sent Spencer his birthday present over a year ago of some Bitcoin.  He sent me his wallet, I sent him some Bitcoin, he was at liberty to spend, or to transfer that Bitcoin right into fiat money on his Bitcoin wallet if he so chose; I hope he didn't, because it's up five times since I sent him that store of value.

Peter Schiff: He didn't; he still has it.

Greg Foss: Which I'm happy for, Peter, because here's the reality, okay.  I've been involved in Bitcoin since it was under $1,000 a Bitcoin, and I sincerely believe that Bitcoin represents better risk-adjusted value today, at its price today, than it did when it was under $1,000.  Very simply, the asymmetry of the trade opportunity in front of us right now, in my opinion, is better than it was at $1,000 a Bitcoin.  Why?  The network is stronger; it's the world's most powerful computer network with no centralisation, absolutely controlled by nobody.

You argue that there's 12,000 other coins.  Just because there's 12,000 other equities, does that mean that you shouldn't own a specific equity that you think offers the best possible return, like an Amazon?  Just because Jeff Bezos brought Amazon to the world, there were plenty of other equities you could invest in, but that happened to be one of the best ones you could put your money in.  So, who owned Amazon from the outset besides Jeff Bezos and his mother?  Probably nobody, right, because everybody tries to harvest gains.

But the reality is, at the end of the day, Bitcoin, like any other investment opportunity, is determined by price in the here and now, and you have to understand that if you have no exposure to Bitcoin and it goes up another hundredfold, you are taking a tremendous risk relative to having a proper portfolio allocation.  So, all of this will always come back, from my perspective of trading risk for over 30 years, you need to look at the asymmetry of the return opportunity.  Something that can go up a hundredfold and it could fall by 100%, or you could lose all your money, doesn't mean you shouldn't own it.

Very simply, going back to the equity analogy, 30 years ago, the components of the Dow Jones Industrials looked vastly different than they do today, and those equities over time tend to go to zero.  But in the interim, they can go a lot higher and survive forever.  We can argue the past, because that's all that we have factual information on.  The future is nothing more than a prediction.  And as a risk manager, it's my opinion that if you have zero exposure to Bitcoin, you are not managing your risk properly, provided we both agree on common ground, which is that fiat currencies are the Ponzi, and I think we would agree on that.

Fiat currencies right now are the Ponzi scheme.  And more importantly, you argue that, okay, we'll create a gold-backed currency using digital, potentially central bank digital currencies?  Boy, I'm going to love to see that, because that means that you've got to convert your whole fiat standard back to a gold standard, and then you have to take control of that gold out of the hands of the central bankers.  So, hey, we may get there, sir, but I would just like to have --

Peter McCormack: Let me do the in between and let you unpack it.  Greg, just a quick question I'll just put to you on that.  Half the argument you made there about why you should invest in Bitcoin I think would also be fair to Ethereum and NFTs, two things I don't invest in myself, because I don't believe in them.  You said the asymmetry and the opportunity, and it's basically based on the potential returns.  You could make the same argument for Ethereum.

Greg Foss: I disagree.  The one thing about Bitcoin that you love is the fact that it's 21 million; that's what you know about Bitcoin, maths and code, 21 million.

Peter McCormack: Okay, Peter, there's a lot to unpack there, I'll let you go.

Peter Schiff: Yeah, before I even start the unpacking, just a comment on the last thing that you said about a return to a gold standard, which would be great if sovereign nations went back on a gold standard, but that doesn't happen.  Individuals on their own can decide that they want to save in gold and transact in gold, just like people are doing this with Bitcoin.  There's nothing that stops people from having a digital currency backed by gold, other than the regulations that drive up the cost; but there's nothing that stops people from…

Like my bank, when I eventually can get the damn thing up and running, but I have gold as a currency.  My core banking software looks at gold the way it looks at euros, pounds, yen, dollars, and you can do everything with gold that you can with those currencies at basically the same cost.  So, individuals don't have to wait for the government.  If they want to own gold, if they want to accept payment in gold, they can do it, and it's very efficient and very simple, so we don't have to wait for the governments to do it.

But to get back to all the things you were saying, I mean first of all the idea that price is truth.  It's only truth in a sense that price reflects the popular opinion at the time that the price is being set.  But more often than not, the popular opinion is wrong.  You go back at all kinds of bubbles, was price truth in 2000?  So many of those dotcom stocks went to zero.  People were paying $50, $100, $200 a share and they went to zero, so price wasn't truth.  Price wasn't truth when people were paying par for sub-prime mortgages that went to zero.  But it was truth to the extent that people were making a mistake collectively and the price did not accurately reflect the value of the underlying asset that was being priced. 

So, that's the situation with these cryptocurrencies.  Yes, the $50,000 price is an accurate representation of the market today based on what people are willing to pay to buy Bitcoin, and how few people that own Bitcoin want to sell.  But you fast-forward to some point in the future when you have a different situation, when very few people want to buy and everybody's looking to get rid of their Bitcoin, you're going to have a much lower price.  So, just because the price is high, doesn't mean the market is right to assign that price.

Now, when you're talking about, "Well, you should buy Bitcoin", you've got 12,000 cryptocurrencies and trying to compare that to how many stocks there are; 500 obviously in the S&P, 2,000 stocks in the Russell 2000.  Yes, those individual companies are much different from one another than any of these cryptocurrencies are different from the other.  You're talking about a different business with a different customer base, different revenue, business model, risk profile's competitive.  They're businesses; they generate income; they pay dividends to the shareholders.

So, depending on my outlook over a sector or an industry or a management team, or all different things, there's a lot of differences between stocks and it makes sense to diversify, because things could happen to a business that you don't expect, things can go wrong with a company that you don't anticipate.  But when it comes to all these cryptocurrencies, as far as I'm concerned, the biggest difference is the name.

Yes, some of them are a little different, proof of work, proof of stake, what the cap is, Bitcoin is 21 million.  There's nothing magical about that number.  There are plenty of other cryptocurrencies that also have caps, there are other cryptocurrencies that have an inflation rate that's built in at a very low level.  I mean, there's all sorts of gimmicks out there, and they're going to keep coming up with new ones as long as there's demand, as long as there are people out there willing to buy these things, the supply is going to keep growing and growing and growing.

Eventually though, you're going to have all this supply and the price is going to stop going up.  I mean, it only goes up -- you talked about fiat currency being a Ponzi.  These fiat cryptocurrencies are also Ponzis.  The only reason they go up is because people want to buy them.  And the only reason people want to buy them is because they think they can sell them to other people who are only buying them because they think they can do the same thing.  But eventually, you run out of new people and the whole thing collapses.

Peter McCormack: I think me and Greg would probably agree with you on some of these fiat cryptocurrencies.  I think that's why there's this separation between those who are Bitcoin only and those who are into the broad crypto. 

Peter Schiff: But I want to ask one question, because this is one thing that I've got to ask, because I don't get it.  So, if Bitcoin is stored energy, this is what I don't understand; I know it takes a lot of energy to mathematically solve a problem to create a Bitcoin, so a lot of energy is used to create a Bitcoin.  But you're saying that I can liberate that energy, that all that energy is somehow stored within the Bitcoin and I can extract it and power my house with it or drive my car with it; there's actually energy that I can release from the Bitcoin and use it?

Peter McCormack: Well, yes, because you can convert it back to energy by buying energy with it.

Peter Schiff: But no, that doesn't convert it to energy.  Now I have to buy new energy that has to be produced all over again.  A store of energy would mean that I can just take my Bitcoin and crack it open and the energy comes out.  To say that I could use it to buy energy; well now, somebody has to make that energy from scratch so I can buy it.  That means Bitcoin isn't storing anything.  What you're just saying is, I could use Bitcoin to buy energy if somebody is dumb enough to buy my Bitcoin.  But if no one wants my Bitcoin, I don't have any energy.

Peter McCormack: Think of it in terms of the miners who are using excess energy which goes to waste.  So, whether that's the excess energy that isn't used at hydro dams, or excess energy that isn't used at flaring.  What they're doing is they're turning that excess energy into a pristine asset which they can then use to buy energy.

Peter Schiff: No, they're wasting it on Bitcoin.  They could have used that energy to do something else.  It's not like you just have all this extra energy and they've got nothing to do with it.  They use it to make Bitcoin because they can sell the Bitcoin at a profit right now, because there's a bunch of fools that are willing to buy it; that's what's going on.  We're wasting energy, we're not storing anything, we're wasting it.

Peter McCormack: Yeah, I'm jumping in when I'm meant to moderate.  Greg, I'll let you answer that.

Greg Foss: So, there's a lot for me to unpack in that one.  Look, I want to take one step backwards first, Peter Schiff.  I like your analysis in terms of debating where prices can go; they can go in either direction though, right?  What if Bitcoin is actually super cheap right now?  You're arguing that it's super overvalued; I'm actually arguing that it's super undervalued.

I come up with my intrinsic value calculation using credit default swaps on sovereign nations on the outstanding amount of debt that these sovereign nations hold.  By that very basic calculation, I feel that Bitcoin's worth over $150,000 per Bitcoin, based on the insurance that it provides against the default of sovereign nations.  You may say, "Oh my goodness, the US will never default"; I'll argue that the US actually did default back in 1971 when it went off the gold standard.

This is some argument that can be debated on both sides, but here's my point.  The value of Bitcoin is the network, okay.  It's the strongest computer network in the world.  These other coins may be competing for that same supremacy, but right now they don't have it.  Bitcoin is the strongest computer network in the world bar none.  It offers the ability to transfer value, whether you call that value digital energy, which I like to call it and you argue that it's not, you can transfer value across the world, it will settle in ten minutes and the person that receives it can turn that into a cup of coffee if they want, they can go to a gas station and buy gasoline and put it in their car if they want.  Very simply, you are transferring value across the world's most secure computer network with no centralised control.

Peter Schiff: You're transferring Bitcoin.  Whether or not Bitcoin has any value depends on the market.  Maybe people will want to buy Bitcoin, maybe they won't.  So, I'm not transferring anything of substance, I'm just transferring the Bitcoin.  But, if your argument is that the fair value of Bitcoin is triple the current price, you're saying $150,000 and now it's at $50,000, to me that is not a good risk reward.  If I can only triple my money or lose it all, I mean for me --

Greg Foss: That will go up, Peter, as the price of the credit default swap market reflects higher probability of default, the implied value of Bitcoin increases as the CDS spreads increase.

Peter Schiff: Look, I agree with you that we defaulted in 1971.  I said that myself.  Roosevelt defaulted to the American public in 1933, we defaulted to the world in 1971.  I do think that we could have a breakdown of the dollar, a lot of this bad stuff can happen.  That's why I own a lot of gold stocks, a lot of silver stocks.  I think these stocks that I own, betting on a monetary meltdown in the United States, betting on a crisis in the US dollar, I think some of these stocks could go up 20X, 50X, 100X, some of my junior mining stocks.  I like those odds and I don't think these stocks have the risk of zeroing out like Bitcoin does. 

So, if I'm going to gamble on that type of outcome, that's where I want to do it.  I don't want to buy something for $50,000 that ten years ago was under $1 and somehow say that it's cheap, even though it's gone up so much, and to say that it's less risky at $50,000 than, you said, when it was at $1,000.  I think it's more risky.  The price is higher, there's more risk, more people know about it.  At least when I first heard about it 12 years ago, whatever, 11 years ago, when it was under $10, at least back then there weren't that many people who knew about it, because I didn't know about it until somebody told me about it.  But now, everybody knows about it; it's all anybody talks about.

So, to say this is new, this is the ground floor, when everybody knows about it, everybody's talking about it, high school kids own it, junior high school kids own it; this looks like a bubble that's peaked, not the beginning of some new bull market.

Greg Foss: Respectfully, Peter, there are other gold bugs out there with exactly the same arguments you have on the relatively cheapness, if you will, of gold equities versus other equities out there, multiples of enterprise value-to-EBITDA.  I will bring up a very wise gold investor that I've come to know, Lawrence Lepard, who believes in all the things you're saying, but also believes you need the diversification into Bitcoin, because what if Bitcoin goes to our price targets, and I'm including Lawrence here, of over $1 million a Bitcoin; what if?  And nobody can categorically rule that that is not a possibility.

You may say that it's close to zero; I will just say this.  Imagine, sir, if you had put 1% of your gold portfolio into Bitcoin when it was at $10 a Bitcoin; 1%, you're risking 1% of your portfolio.

Peter Schiff: Yeah, I'd be a billionaire right now.

Greg Foss: Your portfolio would be up 50 times, 5-0, your whole portfolio would be up 50 times.  That's what risk management is.  I'm just going to respectfully tell you that I think Bitcoin, at $50,000 a Bitcoin, is still a rounding error in terms of the price that it can obtain over time.

Peter Schiff: Well, to me, I don't care how high the price of Bitcoin goes up, even if it goes to $1 million a Bitcoin, it's not going to affect me, I'm not going to lose anything, I don't want to own Bitcoin and so, what do I care how high the price goes if I'm never going to buy it?  The question is, what are all the people going to do with their Bitcoin when they want to buy something, because I'm buying real things.  I own real businesses, I own real estate, I own stuff that I can actually use.

If all you own is Bitcoin, you want to buy the stuff that I already have.  Everybody who's buying Bitcoin wants what I already have.  I don't want any of their Bitcoin.  So, the risk is that you hold all your Bitcoin and you ultimately can't buy anything with it.  Because, even if it goes to $1 million and now all the Bitcoin millionaires and billionaires, they all want to cash out, they all want to buy a nice house, they want to buy a new car, they want to buy a boat, they want to buy a plane, they want to buy new clothes, they want to travel; okay, sell your Bitcoin.  Who's going to buy it?  Now the price is going to collapse.

Greg Foss: How much energy do you own, Peter; how many energy equities do you own?  Do you have a zero exposure?

Peter Schiff: No, I have a lot of energy companies.

Greg Foss: On behalf of your unit holders, or in your own personal PA?

Peter Schiff: Yeah, well I own a lot of oil and gas stocks, we own oil companies in our funds.  I also own a lot of base metals, because I look at electric cars, so I own a lot of copper, I own a lot of nickel.  I own other metals that I think may be in demand if we move more away from the fossil fuels, but I own a lot of those too.  I own a lot of agriculture stocks.  I own a lot of stocks.

I mean, gold stocks are part of my portfolio, they're the most speculative part, but I have a lot of far more conservative companies around the world across a broad spectrum of industries.  I just try to find stocks that I think represent good investment value that pay good dividends.

Greg Foss: How many equities have you owned in your 30-plus-year career that have gone to zero?

Peter Schiff: Several; I don't know the exact number.  I've owned some speculative companies that have gone bankrupt.

Greg Foss: Good, that's what you're supposed to do, because that means that you're taking the risk on behalf of your unit holders that will sometimes not work out to the upside.  It was a bagel; you got bageled on a number of equities.  That's what any good risk manager should happen, because if they're too conservative, they're sitting in a room doing nothing, they're earning an ETF-like passive return on an index; or, you're an active portfolio manager trying to properly risk-adjust a portfolio.

The big problem I have with you, Peter, is that you're out there saying to people that don't have proper portfolio diversification that they shouldn't touch Bitcoin.  In fact, this can change some lives of people, like the El Salvadorans, who by the way, their President, you may think it's funny, I think that it's a brilliant decision to make Bitcoin legal tender just from a GDP perspective, where he'll increase his GDP by 4%, because remittances will not be basically stolen from the population by the likes of Western Union.  You can do this on a network --

Peter Schiff: Western Union charges $4.95 to send up to $500.  I mean, this is not an enormous fee.

Greg Foss: Baloney, it's 20%.

Peter Schiff: No, it's not.  Look on their website.  It's not 20%.  Maybe it's 20% if you want to send $10 or $20, but that's too small an amount to send.  But they're going to waste so much money taking their dollars, buying Bitcoin, shipping the Bitcoin, getting rid of the Bitcoin.  Most merchants are not going to accept payment in Bitcoin, they're going to want to get payment in dollars.  You're talking about how people can get rich on Bitcoin; people can go broke on Bitcoin.  I mean, this is not going to end well for El Salvador.  I mean, this is a Hail Mary for El Salvador.

I don't know, maybe some of the guys high up in government have been bought off, I don't know what's going on behind the scenes, but it doesn't smell right to me.

Peter McCormack: Okay, listen, so we don't jump around subjects, because I think El Salvador's an interesting subject, I also think remittance is an interesting subject and there's nuance in both, I just want to go back a step, Peter, where you mentioned people want to buy things eventually with Bitcoin.

So, I'm somebody who does buy things with Bitcoin, so it does happen.  Sometimes I'm paying with the Bitcoin, and sometimes I'm converting the Bitcoin to cash and buying things with it, but that is happening, so people are buying things with Bitcoin.  You can buy with Bitcoin on the Schiffgold website, your own website.

Peter Schiff: Again, people don't understand the difference.  When you go to the Schiffgold website, there's a company --

Peter McCormack: That converts it, yeah, I understand that.

Peter Schiff: -- that's in the middle called BitPay.  So, you're basically selling your Bitcoin to BitPay, then BitPay is taking the Bitcoin, selling them and getting dollars, and then giving the dollars to Schiffgold.  So, there's an intermediary company in there.  It's not where Schiffgold is selling gold in Bitcoin, because we don't want Bitcoin, because we have to buy gold from wholesalers, they want dollars; we have rent, the landlord wants dollars; we have employees, they need dollars because their rents are in dollars; the grocery store wants dollars; the government wants taxes in dollars.  So, nobody can transact in Bitcoin.

Peter McCormack: No, I understand that, but I want to understand what's the difference between that and, say, when I come here to El Salvador and I use my debit card.  They don't send them pounds; there are companies in between that convert those pounds into dollars so they have dollars here.  How's that any different?  It's just a currency conversion.

Peter Schiff: Right, when you're using your debit card and you have dollars in your account --

Peter McCormack: No, I have pounds.

Peter Schiff: Right, you have pounds in your account and you go to a store in the US and there's dollars, the bank will do the FX for you.  They're going to take the currency that you own and sell it to get the pounds.

Peter McCormack: But what is the difference?  It's just a currency conversion by an intermediary.

Peter Schiff: Well, it's not really a currency conversion; it's an asset sale into a currency, because Bitcoin isn't a currency.  Bitcoin is a token.  What you're saying is, I can go and buy a cup of coffee with IBM, because I can have an app that takes my IBM shares, sells them for dollars and then uses the dollars to buy a coffee.  I mean, you can sell anything and then use the proceeds to buy something.  That's not using it.

Peter McCormack: Hold on, Peter, I just want to focus on that point.  You said people aren't using Bitcoin.  Whether you think it's a currency or token is kind of irrelevant.  It's a currency in El Salvador, it's a legal currency as of Tuesday, so it is a currency here.  But I don't understand the actual difference between me using my debit card to spend pounds and you getting dollars, and me using my Bitcoin wallet to spend Bitcoin and you're getting dollars; it's the same scenario.

Peter Schiff: Well, it's similar in that you're not paying in the same unit that the merchant is selling in, because there's a third party that's in between.  But the way it's being done with Bitcoin, you could use any asset.  You could have any stocks, you could have anything that has a liquidity; anything that has a market can be sold to get cash, that's the difference.

I can go right now, I have a debit card against my brokerage account, so I can go and buy a cup of coffee by borrowing money against my stock portfolio.  So, it's not being used…  The price of the merchandise is not Bitcoin, and I guarantee you that in El Salvador, nobody is going to have Bitcoin prices on their merchandise.  It's not going to be, "Here is a gallon of milk and here is the price in satoshis".  The price will be in US dollars.  Even if they accept payment in Bitcoin, they're going to negotiate the conversion rate.  Nobody is going to price their products in Bitcoin, because it's impossible.

Peter McCormack: But they don't price things here in pounds either. 

Peter Schiff: No, they price things in dollars and they're not going to start pricing anything in Bitcoin, even when it's legal tender next week.

Peter McCormack: Yeah, but they don't price it in pounds, but I spend my pounds on a debit card and they get dollars; and they price in dollars and I spend my Bitcoin and they can get dollars, or they can choose to keep the Bitcoin.

Peter Schiff: In that respect, yes, it's similar.  That's why I tell people I do the same thing with gold.  You can have gold in your account and you can have a debit card, but you're not actually spending your gold, because I have to liquidate the gold to get the money.  Now, what could be done, if the merchant wanted gold, I could take the gold and transfer it from the customer's account to the merchant's account, and then they would be paying in gold.  But no, what I'm doing is I'm selling the gold to get the dollars, because the dollar is the currency, not the gold.

Peter McCormack: Okay, well I don't think there's much of a difference, but Greg, do you want to jump in?

Greg Foss: I'll agree.  Now, can I add, look guys, will we agree that money has always been a technology or essentially a ledger?  Because, Peter, what you're saying brings me back to a story.  Did you ever hear about this guy that's walking through town and he's got a cow for sale for $600,000 and the townsfolk are laughing at him?  Three days later, he's walking through town with three chickens and they said, "I told you you'd never sell your cow for $600,000", and he goes, "Damn right, I did, I sold it for these three $200,000 chickens".

It makes no difference, it's a ledger.  That's basically what money is.  And triple-entry accounting in the Bitcoin standard is the most secure ledger ever created by man.  And it doesn't matter whether you're paying in Bitcoin or in gold or in pounds or all fiats, which are melting ice cubes, it's nothing but a ledger.  And that is why price is so important.

Peter Schiff: It's not a ledger.  So, the way money came about is it was an improvement over barter, where I have one particular commodity and I trade it for a commodity that I need.  But that's always cumbersome.  If I am a chairmaker and I need a new pair of shoes, I've got to find a shoemaker who wants my chair, and it's difficult.  But what man discovered was, "Hey, if we can have one commodity that we all can trade in, and we could use that commodity as money, then we won't have to find a counterparty".

So, a lot of different commodities served as money over time, but gold ended up being the best commodity, the commodity best suited to function as money, because of a lot of properties that it had; and these are the kinds of properties that Bitcoin tries to replicate.  But gold would not have been money, but for its value as a metal, as a valuable commodity that people needed.  So, the real definition of money is the most liquid commodity.  It's the commodity that's most easily exchanged for other commodities, other goods and services.  It's not simply an empty ledger on an accounting statement. 

The accounting statement is going to reflect the amount of gold that you have; it's a quantity of gold, because the more gold you have, the more metal you have; and the more metal you have, the more stuff you can make with the metal.  But to say that the properties of a commodity can be completely stripped away from money, and we're going to say this worthless token with no real use is now going to be money because we all say so, and we're all going to just believe in it, well that's the concept of fiat currency.  It has value because we believe it has value.  But at least with a fiat currency, you have a government behind it; whereas with Bitcoin, there's nothing behind it.

Peter McCormack: So, Peter, one of the things you've said there, I think I've seen you tweet it before, is that Bitcoin doesn't have any real use cases beyond just being a transfer of that token.  So, one of the things I just wanted to raise into this, and I'll let Greg interject is that, do you understand the difference between Bitcoin as the token and then Bitcoin as the payment rails?

Peter Schiff: Well, I don't understand how my ownership of a Bitcoin gives me ownership of that payment rail and how that generates any income to me.  What I do know is that all the people who own Bitcoin collectively are basically taxed by all the miners to maintain the network.

Peter McCormack: They're not taxed, sorry that's incorrect.  They're not taxed.

Peter Schiff: Well, there's a cost.  They're mining Bitcoin and selling it, so they're increasing the supply of Bitcoin and so that has to come at the expense of all the people who own Bitcoin.

Peter McCormack: No, it's not that, that's not true.

Peter Schiff: Well, if the supply of Bitcoin goes up, doesn't that somewhat dilute the supply that is already out there?

Peter McCormack: It dilutes the supply that's already out there, but we already know that there is actually already 21 million Bitcoin, just some haven't been mined yet, but they're not diluting the supply.

Peter Schiff: All the cost, all the energy, all the labour, all the computers that are used to maintain Bitcoin Network, where's all the money coming from to pay all those people?

Peter McCormack: So, they charge a transaction fee to use the network.  So, if you want to use the network, if you want to send Bitcoin to somebody, you pay a transaction fee.

Peter Schiff: Right, so that's like a tax.

Peter McCormack: No, it's not a tax.  That's like saying, if I buy services from Schiffgold, it's a tax; it's not, it's a free market.

Peter Schiff: No, okay.  I'm not saying tax like it's a government, but I'm saying there are fees that are being assessed to the Bitcoin community in order to maintain the network.

Greg Foss: To verify the ledger, to verify the immutable ledger.  It's verifying every single transaction that's happening on the blockchain.

Peter Schiff: Yes, and it costs money, it's not free, that's my point.

Greg Foss: Okay, Peter, no disrespect, but how much forged gold is there out there; how do you verify every single piece of gold?

Peter Schiff: I don't have to.

Greg Foss: Of course you do, sir, because there's Russian gold in vaults that is actually tungsten.  You've seen that before; I'm afraid it's true.  Then you talk about the supply.  The beautiful about the supply of Bitcoin is it's absolutely programmed mathematically; you know what the supply is.  What if the price of Bitcoin doubles?  Does the supply change?  No, it doesn't.  What if the price of gold doubles?  Do you think the supply of gold coming out of the ground is likely to change?  I would say yes, it's highly likely.

Peter Schiff: Not immediately.

Greg Foss: Does it matter?  It's not programmed, Peter, it's not programmed.

Peter Schiff: Okay, what you're saying though is a bunch of nonsense.  I mean, first of all, if the price of gold were to double, there's a good chance that the cost of mining it would go up quite a bit too, if inflation is driving the gold price higher.  But assuming that the cost of mining gold only goes up 30% and the price of gold doubles, yes, there's going to be some more gold pulled out of the ground over time; it's not like it's immediate.  It's going to take years to get the extra gold out of the ground.  Mines have to be refurbished.  It's not that easy.  The supply of gold is not going to grow very dramatically. 

Historically, it grows maybe 1% to 2% a year, which is a fine, steady supply increase relative to population growth and things like that.  But yes, if the price of Bitcoin were to double, I think that there would be a little bit more mined, because now, assuming the energy costs don't go up, more power can be devoted to mining Bitcoin and --

Peter McCormack: No, it doesn't work like that; it actually doesn't work like that.  That's why we have this thing called "the difficulty adjustment" that basically regulates --

Peter Schiff: Right, so it will just get more expensive to mine it, is what you're saying?

Peter McCormack: Because there'll be more competition.

Peter Schiff: Yeah, all right.  But what happens when the price of Bitcoin collapses, then what?  What happens if it --

Peter McCormack: The same thing.  We get another difficulty adjustment down.  So, that's just programmed in to keep the supply regulated.

Peter Schiff: But the thing is, there's no real demand.  You don't know.  You're all speculating that people are going to want Bitcoin in the future.  You have no idea that anyone's going to want Bitcoin in the future.  They may not.  I mean, Bitcoin has a very short history to really extrapolate anything.  It's not like it's been around for 100 years or 1,000 years.  You can say, "Yeah, look, people have wanted it".  It's been around for a decade.  That is a very, very short period in the scheme of things.

When you talk about, "We know for sure there's only 21 million", yeah, that's what we think.  How do you know?  How do you know that's not going to change?

Greg Foss: Maths and code.  Decentralised, it's decentralised, you cannot change that.

Peter Schiff: Well, how do you know that some miners that can't get together and take control of the network, they have enough of the mining, that they can increase the supply of Bitcoin and decide it's not 21 million; there's going to be more.

Peter McCormack: Because the miners can't do that on their own.

Greg Foss: It's the nodes, it's all about the nodes, Peter.

Peter Schiff: Well, maybe they can't do it now, but maybe they will be able to do it tomorrow.  Things change, technology evolves, people discover new things that they didn't think they could do.  At one point, people didn't think we could fly, "That's impossible", but now we've got planes.  Things happen.

Peter McCormack: You make a point that things can change, but to put an analogy to you, the chance of Bitcoin increasing the 21 million supply is probably similar to the chance of me being able to convert lead into gold.  It's very, very difficult because of the way the network's been set up.  But I did want to focus on a slightly different point. 

I think what I say to one of your points is that gold has an industrial use that gives it floor value, and you've stated before that Bitcoin doesn't have any use beyond the token.  But actually, the payment rails are now being used to the point where, just one example, a company called Strike, they've essentially created an international Venmo.  So, I can send my fiat currency to any other currency in the world and they get an instant conversion, they receive the money instantly, at almost zero cost to transact.

Peter Schiff: What does that have to do with Bitcoin?

Peter McCormack: Well, it happens on the Bitcoin rails; this happens on the Bitcoin Network.

Peter Schiff: All right, but can that happen on the Bitcoin rails if Bitcoin was $1,000?  Does it have to be at $50,000?

Peter McCormack: Yeah, it does; it doesn't matter --

Peter Schiff: So, it doesn't matter what price Bitcoin is, those rails are still available?

Peter McCormack: Yeah.

Peter Schiff: So, I don't understand how those rails are giving Bitcoin any value.  If I own a Bitcoin, I'm not getting paid every time somebody uses those rails.

Peter McCormack: No, I just wanted to finish this just by saying, would you or would you not agree that having an international Venmo, which is instant and zero cost, has some value?

Peter Schiff: Yes, I think it has value.  It doesn't have value to someone who owns a Bitcoin though; I don't see how the two are related.

Peter McCormack: Well, because what happens is, the way it works is having liquidity in every country.  So, if you have more liquidity in every country that is powering this network, then the value of Bitcoin goes up.

Peter Schiff: Why?  The value of Bitcoin only goes up if people want to buy Bitcoin, and if people that own it don't want to sell it, if they want to hodl it.  In order for the price of Bitcoin to go up, the people that own it have to not sell it, and then more people have to come in and buy it.

Greg Foss: Same as any asset in the world.

Peter Schiff: No, it's not.

Greg Foss: Does the internet have value, Peter?

Peter Schiff: It has value to businesses that use it to make more profits.  Look, if you own a stock, you never have to sell that stock, because the stock is paying dividends, or the company is using its earnings to buy the stock from you, because it's recycling its earnings into share buyback.  If I own real estate, I don't have to sell real estate, I can rent it out, I can live in it.  This is nonsense to say that every asset is just a speculative token and that the only way to make money is to sell it to somebody else.

Greg Foss: How do they determine the price on that?  It's a multiple of EBITDA, a multiple of cash flow.  Plenty of stocks don't pay a dividend and don't have earnings, but there's still a value there on a nature of --

Peter Schiff: No, that's different.  If a company doesn't have any earnings and doesn't pay any dividends, when you're buying it, you're speculating that the company will eventually have earnings and pay dividends.   And, yes, that is a highly speculative stock investment, because you're betting on earnings that you think will materialise in the future.  But Bitcoin will never have earnings in the future.

Greg Foss: Do you own any of those stocks?

Peter Schiff: I do own some, a speculative mining company.

Greg Foss: Of course, so then you're saying exactly the same thing.  It's exactly the same thing.

Peter Schiff: No, it's not, because Bitcoin will never have earnings, it will never pay a dividend; it will always just be a Bitcoin.

Greg Foss: What if energy is priced in Bitcoin?  What if Russia decides they want to receive Bitcoin as opposed to US dollars?

Peter Schiff: And if I sprout wings, I guess I can fly.

Greg Foss: Are you going there's a 0% chance -- why not?  That's what risk management is.

Peter Schiff: You're in a fantasy here.

Greg Foss: Oh, stop, it's about risk management.

Peter McCormack: Hold on.  We're losing control.

Peter Schiff: I'm not managing my risk by taking on a bunch of risk.  That's what you're trying to say to sucker someone in to buying some of that; I'm not going to fall for that.

Peter McCormack: Let's bring it back, because I think Peter Schiff agrees with bitcoiners on 90% of economics issues.

Peter Schiff: Maybe more, maybe 99%!

Peter McCormack: So, the solution is essentially two different technologies really.  One is gold, one is Bitcoin.

Peter Schiff: Well, gold's not a technology; gold's just a commodity.  It's just a great money, great store of value.

Greg Foss: What are the cash flows on gold again, Peter?  What's the dividend the gold pays?  Come on.

Peter Schiff: You see this watch?  This is gold.  That's what you do with gold.  Or, all the chips that are mining Bitcoin, they've got gold inside.  Gold is used in the world.  It's an actual thing that people want, that people need, that has properties that are very desirable for life.  I don't need Bitcoin for anything.  I've never needed a Bitcoin; I never will need a Bitcoin; nobody needs a Bitcoin; you don't do anything with it; they're going to be no value; it's just speculative.

Greg Foss: Okay, let's bring it back, Peter McCormack, bring it back.

Peter McCormack: Hold on, I just want to slow this down.  So, I would argue in different scenarios, different things make money, due to the circumstances of them.  So, for example, cigarettes can be money in a prison, because they don't have real money; so, they can be used as a currency.

Peter Schiff: And because you smoke them.  That's what gives them value; there are smokers in prison, they want to smoke a cigarette.

Peter McCormack: Yeah, okay, that's a fair point.

Peter Schiff: Yeah, you can't smoke your Bitcoin, although you have to be smoking something to buy a Bitcoin!

Peter McCormack: But you can still spend your Bitcoin.

Peter Schiff: But you can't smoke it, you can't do anything with it.

Greg Foss: Except buy other stock, much like cigarettes in prison can buy other stock.

Peter McCormack: Guys, guys.

Peter Schiff: Because people smoke them!  If there were no smokers in prison, cigarettes wouldn't be money.  There's got to be people who want to smoke them; that's where you get real demand.  Like, you get real demand for gold from jewellers who want to make jewellery, or from computer companies that want to make chips.  You have to have an end user.  There is no end user to Bitcoin, because there is no use for Bitcoin.

Peter McCormack: Okay, let me put it a different way then, Peter.  My daughter plays this little game called Robux.  That itself has a currency inside it.  It only can be used to spend, yet my daughter wants Robux and she wants to be able to spend those Robux within that network, because it solves a problem, which means that she can jump on a giraffe and --

Peter Schiff: Yeah, and I played Monopoly and I had Monopoly money too.  It's the same difference.  It has value in Monopoly; it doesn't have any value outside Monopoly.

Peter McCormack: Okay, so you agree that within certain networks, tokens can have value as money if people want to exchange it and use it as money?

Peter Schiff: Sure, in a game, to buy make-believe stuff.

Peter McCormack: Maybe, but then I would argue that there are scenarios in the world that people need a different form of money, because the current money doesn't work for them.

Peter Schiff: Yes, a different form of money, not fantasy make-believe digital tokens.

Peter McCormack: Peter, this is where this becomes important.  Look, you're a wealthy guy, you live in Puerto Rico, you have a comfortable life.  But let's talk about people in different scenarios where this may be useful.  I'll give you a couple of examples.

One would be the Belarus protest against Lukashenko, when state employees wanted to strike, but they couldn't afford to strike.  The only way they could get money was donations coming in via the Bitcoin Network, instantly and near free, and they could convert that to the local currency so that they could survive.  Same with the End SARS protest in Nigeria.  Same with women in parts of the Middle East, who need ability to store money. 

What I'm going to put to you is that their network, their circumstances of their lives and what they're living is their version of Monopoly, or their version of Robux, where somebody has created a currency for them, which is usable, which fundamentally changes their life.  To rag on that, or not accept it, or not even see it, is actually harming something which is protecting human rights.  Can you not even understand in those scenarios that there is a money for them in that network, similar to a game, that allows them to be able to function?

Peter Schiff: Yeah, well since there has been this big, speculative mania and the price of Bitcoin has gone up dramatically, yeah, certainly people have benefitted from that.  And when it collapses, it's going to be the reverse.  I mean, if you really want to empower people that are unbanked or living in areas of the world where there's a lot of inflation and it's hard to be in the currency, they could do the same thing they're doing with Bitcoin with a legitimate cryptocurrency that was backed by gold somewhere, that would actually have the stability that they need to transact and to price things and to save.  That would work much better than Bitcoin.

But yeah, a lot of people think it's working because the price is at $50,000.  People aren't going to think it's working so well when the price is at $5,000 or $1,000 and they paid $50,000.

Peter McCormack: Well, I've offered you that bet a few times and you've never taken it up!

Peter Schiff: Yeah, you guys always want to bet with me on Bitcoin.  If I bet every Bitcoin guy that wants to bet with me --

Greg Foss: Peter, can I ask a question?

Peter McCormack: Sorry, Greg, I'm on a train of thought here, because I think actually, I think if there's a chance that Peter Schiff can be convinced or understand some of this, it actually is a really good thing.  Now, when you said, yes, people have benefitted from the speculation of the price and they have been able to use this form of money in that scenario, are we therefore not proving the use case that decentralisation is --

Peter Schiff: No, all that's been proven --

Peter McCormack: Peter, bear with me.  Before you just try and answer without thinking it through, let's just think it through.  We've talked about the fact that these people have benefitted from this price appreciation, so they've benefitted from a market for this price existing.  And they've also benefitted from the technology.  So, have we not proven that the world does benefit from a decentralised form of money, that is permissionless, that is censorship resistant; isn't that the innovation?

Where the innovation with gold is you can make jewellery; the innovation with Bitcoin is you've created a money that governments can't control, that can actually help people in certain scenarios.  So therefore, there is a need to hold it, and there is a use case for holding it.

Peter Schiff: Well, first of all, I think governments can have a lot more control over it than you think if they put their minds to it.  I mean, they can outlaw it, they can do a lot of things that could make it very difficult for law-abiding people to have anything to do with Bitcoin, or any other cryptocurrency.  So, it's not like it's beyond the reach of government.  And in fact, it's far more likely that the government in the United States or other governments would ban Bitcoin than they would gold, because it's very difficult to ban gold.

Even when FDR made it illegal for Americans to own gold, it was just in America where that was true.  But Americans couldn't own monetary gold; they could have a gold watch, they could have a gold ring.  In fact, I remember when we grew up, our silverware in my house was made of gold.  People were making silverware out of gold instead of silver, so people still owned gold.  And if you were a jeweller, you could buy gold; if you needed it in industry, you were able to buy it.

So, it's difficult to ban a metal that is so used throughout the world, but banning Bitcoin, which again is used for nothing, is very easy.  Governments can say, "What do you need Bitcoin for?  We're going to make it illegal".  And if it's just going to exist in the corners of the dark web and used in the underground economy by criminals, what's the value of that?  I don't know.  I mean again, there's 12,000 other cryptos that criminals could use.

Peter McCormack: Peter, I do like talking to you about these subjects, but what frustrates me is something with the statements that are either disingenuous, or you just haven't done the work enough.

Peter Schiff: Well, like what?

Peter McCormack: Well, firstly you say that they can ban Bitcoin.  Actually, they can only legislate against it.  People still use it in China and it's been banned 100 times there.  When you talk about areas of the dark web, I'm going to quote Peter van Valkenburgh here, "For every use case you don't like or for every use case which may be considered the dark web, let's consider those use cases where actually Bitcoin is helping humanity".

I don't understand why you can't -- forget the speculators, forget all the things you don't like, why you can't even just approach the idea that Bitcoin is actually a really useful tool for people living in authoritarian regimes, or living in really troubled circumstances.  That permissionless nature that anyone in the world can send Bitcoin to these people and it can help their lives, isn't that something worth going, "Hold on, this is useful.  We should talk about this"?

Peter Schiff: I agree with you, and this is somebody who's operating in the banking system and I see first-hand how oppressive governments are.  Governments are destroying people's liberty, their privacy, and to the extent that there was a way to circumvent that, there was a way around all the government laws, all the KYC and AML, I think that would be good for society.  But unfortunately, the government is not going to sit back and allow people to circumvent these rules.  They're there for a reason and they're going to shut down people's ability to get around it.

So, that would happen very easily with Bitcoin.  They can impose tremendous penalties for being caught with Bitcoin, or using Bitcoin, and then people would go away from it.

Peter McCormack: Why didn't Lukashenko do that then, because that's what happened; that's what happened in Belarus.  People were using Bitcoin to circumvent the government.  So, why didn't Lukashenko not do that?

Peter Schiff: I don't know, how do I know?

Peter McCormack: But the point being, we have this network that's helping people around the world.  Isn't that worth fighting for, Peter?

Peter Schiff: But I don't think that's the right battle.  I would want a battle that, yes, we should fight against government tyranny and what they're doing to destroy our privacy and our freedom, but the solution is not going to be Bitcoin, because Bitcoin isn't going to work and a lot of people who've put their faith in it are going to end up losing a lot of money, because eventually the bubble's going to crash.

And I'll tell you this.  If the US Government thought that a lot of tax revenue was being lost due to Bitcoin, they would come down on it hard.

Greg Foss: What if a lot of tax revenue can be made by taxing Bitcoin capital gains, Peter?  But let's go back to a comment --

Peter Schiff: Well, there won't be any capital gains then!

Greg Foss: Wrong.  Are you 100% certain that Bitcoin is going to fall in price, Peter, because ever since I've listened to you, you've been saying you're 100% certain it's going to fall in price, and it's done nothing but go up.  And I'll just throw this saying out, "Someone who's wrong 100% of the time is just as valuable as someone who's right 100% of the time", right?  The point is, you don't know.

Peter Schiff: I'm not wrong 100% of the time by saying that Bitcoin is eventually going to crash.

Greg Foss: Are you sure of this? 

Peter Schiff: Yes.

Greg Foss: Let's bet on this, take my bet.

Peter Schiff: You can't bet on it.

Greg Foss: Why?

Peter Schiff: Because I don't know when it's going to crash; it's going to crash eventually.  And you know what, I am so sure that Bitcoin's going to crash that I don't own any of it.

Greg Foss: And you've done horribly; you've been a horrible risk manager up until now.

Peter Schiff: Well, I don't care.

Greg Foss: You have to; that's your fiduciary responsibility, is to be a good risk manager.

Peter Schiff: No, it's not.

Greg Foss: Yes, it is, sir.  As a money manager, it's your fiduciary responsibility to be a good risk manager.

Peter Schiff: No.  Any fiduciary who gets involved with cryptocurrencies is going to get sued when they crash.  That I can tell you.  There's no way the lawyers are going to escape that one, and they're going to be, "That was reckless and irresponsible.  You shouldn't have bought that".

Greg Foss: You're 100% certain? 

Peter Schiff: Yes.

Greg Foss: That's a very dangerous position to be in, Peter; you know that as well as I do.

Peter Schiff: Well, are you 100% sure it's not going to crash?

Greg Foss: No, I'm not.

Peter Schiff: So you're saying I could be right that it goes to zero?

Greg Foss: Absolutely you could be right.  In fact, listen.  If I give you the chance it could go to zero, would you give me the chance it'll go to my price target of $2 million a Bitcoin, because you have to; will you give me that, sir?

Peter Schiff: There's a chance that anything can happen, but I don't think that chance is high enough that I want to bet on it.

Greg Foss: But the markets are only saying it's a 2% chance right now.

Peter Schiff: I don't care what the market is saying.

Greg Foss: The market's only saying it's a 2% or a 2.5% chance.

Peter Schiff: The market says a lot of things that turn out to be wrong.

Peter McCormack: Well, do you know what, I find one of the biggest distracting parts of this thing sometimes is price.  I think one of the most difficult things with Bitcoin is the volatility, and I'm with you on this, Peter.  It could go up to $150,000; it could crash next year for $30,000.  That absolutely is a risk.

Peter Schiff: Well, it could crash a lot lower than $30,000.

Peter McCormack: Well, it could, and gold could crash to $10.  Anything could happen.

Peter Schiff: No, gold really can't go to $10, because let's assume that gold really started to go down, right?  I'm a jeweller; I know I need gold, because I make jewellery.  If gold gets to a certain point, I'm just going to start loading up on it, because I need it.  If I'm a computer chip manufacturer and I know I need gold, and if gold comes down to a really low price, I'm going to stock up, I'm going to build up my inventory.  There's real value, you know, central banks out there that want more gold.

If the price of gold went down, God, I could increase my gold reserves.  There'd be all this demand.  Gold can drop; temporarily it can happen.  It can sell off, there can be a computer programme; but there's so much real buy-in.  And of course, if gold didn't go down that low, nobody could mine it.  All the gold mines would be out of business, so there wouldn't be any new gold.  But you're not going to see that.  That's never happened to the price of gold, going back to the beginning of time.

Peter McCormack: No, you're right, I was wrong there, because of that base industrial use.  But I'm sure I could invent a scenario in the metaverse where no one needs gold anymore, by the way.  But the thing I'm trying to get to is price can itself be distracting, and volatility can be distracting.  But what I find it's very difficult to answer against is the benefits of a money like Bitcoin which is permissionless, which is censorship resistant, which is decentralised, which is out of the reach of government control.

Despite what you said about governments can ban it; they have.  It's banned in Bolivia, it's banned in Pakistan, it's banned in China.  People still use Bitcoin in those countries.  I've been to Bolivia and I've met bitcoiners using Bitcoin in that country, despite it being banned.

Peter Schiff: Well, it depends on the penalties.  Look, I mean people take drugs in America; a lot of drugs are illegal and they still use them.  So, a lot of it depends on how big the penalties are for using it.  So, if the government really wanted to get serious, if the US Government said, "Anybody that gets caught with Bitcoin, it's ten years in jail, $100,000 fine", people aren't going to use it; the risks are too high.  Nobody's going to take a chance.

Peter McCormack: I'll be very surprised if that happens in the US, because firstly I think that's also unconstitutional.

Peter Schiff: Well, look, they do a lot of things that are unconstitutional.  They made it illegal to own gold; so if they can do that, they can make it illegal to own Bitcoin, that's for sure.

Peter McCormack: Well, there's a different scenario with that as well.

Peter Schiff: And they make it illegal to own drugs.

Peter McCormack: Bitcoiners are a very wealthy and powerful group now, and that's been seen as an influence in politics as well.  But again, that's another conversation.  Look, Peter, I would be willing to come down to Puerto Rico with you without a camera without a podcast and just sit down and talk to you about these different scenarios of how Bitcoin is being used around the world.  The fact that it can improve people's lives or saves lives I think is one of the things that it's worth morally, there's a moral reason just to sit down and have a very honest conversation about Bitcoin.

Peter Schiff: But it can ruin lives too.  You act as if it's a one-way street. 

Peter McCormack: Yeah, but they're two different scenarios.  It can ruin lives in terms of an investment, and all investments can do that.  People do that on GameStop, they can do that by buying gold leverage, so let's forget the price argument.  I'm saying, as a technology, it can save lives; as a technology, it is probably saving lives; and as a technology, it's making the lives of people in difficult circumstances better.

Peter Schiff: But the technology can work without Bitcoin.

Peter McCormack: Tell me how; please tell me how?

Peter Schiff: You take a cryptocurrency that's backed by real money, and it doesn't even have to be gold, it can be some other asset, but it has to be backed by something.  And then let all those people transact in that.  Have a viable store of value that isn't volatile, doesn't swing around, that isn't dependent on somebody else buying it, that isn't a Ponzi scheme.

Greg Foss: It's called a blockchain, it would be called a blockchain, and Bitcoin is the first and probably the only real use case for a blockchain, in that it is truly decentralised.  All these other blockchains which have a component of decentralisation, you could do it much more efficiently with other databases.  But let's go back, Peter McCormack, please; I think we agree on this with Peter Schiff.  Sound money is a moral responsibility, correct?  We agree on that.  Gold bugs and bitcoiners all agree that sound money is a moral issue or a moral responsibility, in that vein.

Peter Schiff: Yeah, but Bitcoin doesn't qualify.

Greg Foss: Why?  It's actually a harder money than gold is.  It's got a better stock-to-flow.  And by the way, sir, it is verifiable, portable, transferable, all the things that gold lacks.  It's a better racehorse, as Paul Tudor Jones says.

Peter Schiff: The reason that gold is hard, the reason that it's sound is, those are ways to compare it to paper money, which is soft, not hard.  And when you drop a bill on the table, it doesn't make a sound.  Sound money makes a sound and a gold coin when you drop it, you hear a sound; that's where the sound money came from, it was the sound that the money made.  So, Bitcoin doesn't make a sound, it doesn't have any substance, it's softer than paper.

Greg Foss: Drop that network on the world and it will move the world off its axis.  It is the world's strongest computer system.

Peter Schiff: So what?

Greg Foss: Oh, wow, don't say that, "So what?"

Peter Schiff: The spiel is all part of the cult of Bitcoin to get people into it.  You come up with all this nonsense, but when you strip it all down, it's just a Ponzi, that's what you're talking about; a pyramid.

Peter McCormack: Hold on.  What I would say actually, Peter, there is some validity about the claims that sometimes it can come across as a bit cultish, I do.  I sometimes struggle with bitcoiners with the way arguments have built up.  I'm here now in El Salvador.  I went to a protest the other day and this lady was saying to me, "Bitcoin's no use to me.  I've got $100 to live on and I need to buy food.  I can't save", and she said she just doesn't have any spare money ever.  And if she did, it would be devastating for her to put it into something that in the short term drops. 

I'm with you.  Sometimes we can be cultish about these things, but to me that also just comes down to education and that doesn't mean that Bitcoin can't work for other people.  So, I'm absolutely, fundamentally with you on that point; it can be a bit cultish.  But at the same time, to call it a Ponzi scheme is disingenuous, because it fails the description of a Ponzi scheme, because it's not paying out people.  It is a zero-sum game; it's not paying out people from the new money that's come in.  So, to call it a Ponzi is disingenuous.

Peter Schiff: It's Ponzi-esque, because it's got elements of a Ponzi, it's got elements of a pyramid, of a chain letter; there are all sorts of ways to describe it.  But again, since Bitcoin doesn't generate any money, there's no yield on it, and to the extent that I am able to profit from Bitcoin is because some new money came in and paid a higher price.  And now, for that person to profit, another person has to come in and pay an even higher price.

So, the money that I get out is the money that you put in.  That's the Ponzi nature of it, that everybody depends on new money coming in, so that existing money can get out.  As opposed to a legitimate investment that doesn't need any new money coming in, because the investments themselves generate the money, they generate the return.

Peter McCormack: But that's not entirely true now anymore, because a lot of the things that people are investing in don't generate a return.

Peter Schiff: That's true, but they're betting that in the future, they will.

Peter McCormack: But are they really, because I don't believe they are?

Peter Schiff: I agree.

Peter McCormack: Yeah, so I think that model's broken.

Peter Schiff: Yes.  This is a massive bubble.  Central banks, the Fed in particular, but the ECB, all these other central banks have turned the stock market into a giant casino.  There's massive malinvestment, massive bubbles; and Bitcoin and other cryptocurrencies are just part of that.  In fact, it could be the biggest bubble that the central banks have created; the most irrational exuberance of all.  It is concentrated in cryptocurrencies, now NFTs, or whatever; all this stuff is a bunch of nonsense.

Peter McCormack: But I think quite an interesting thing I've got to here is you obviously admit there's a value in cryptocurrencies in the idea of being able to transfer something around.  I think the difference between maybe you and I and Greg is that you want one that backed by something, whereas we are fine with having something that isn't backed by something.  Would you say that's the fundamental difference between our arguments?

Peter Schiff: Well, I see the benefits of cryptocurrencies backed by real assets and backed by real money like gold.  I think that would be great if we had those circulating, and if the governments allowed it to happen.  But I think the governments would be very threatened by that, because if you had a widely acceptable cryptocurrency backed by gold, everybody would prefer that to the dollar, to the euro, to the yen.  People could price goods and services in it, people could save in it, people could contract in it and the governments would hate that.  They would want to put any of those companies out of business because they would be offering a better product than the government.

Peter McCormack: Well, we saw that with the Facebook currency and Zuckerberg being brought before Congress.

Peter Schiff: Yeah, and he was going to back Libra with a basket of currencies; he wasn't even going to use gold.  Gold would have been a better backer for Libra than a basket of currencies, but then they walked that back and they said, "Okay, we're just going to back the Libra by the dollar and make it into a stablecoin with dollars", and then they didn't even do that.

Peter McCormack: But the point I was trying to get to is, you do see some value in the cryptocurrencies because of the ease of exchange.  I'm just trying to isolate the fundamental differences.  Greg and I don't believe it needs to be backed by -- well, we believe it needs to be backed by maths; you believe it needs to be backed by a physical item such as gold.

Peter Schiff: It could be backed by intangibles; I mean, you could back it with anything that has real value, licences to computer software that generate income, or music, or film libraries.  I mean, you could almost tokenise any real asset, as long as there's some real asset that's backing that token.  But it would be hard to use it as money, unless it was backed by something like gold that's a lot more stable and easier to value than other types of assets.  That's why gold became money in the first place.  So, I think gold is the ideal store of value to back up any cryptocurrency.

Peter McCormack: What I'm saying is, I think that's the fundamental difference; you believe it should be backed up by something, and I understand that argument; and we believe it doesn't.  But the idea of this kind of cryptocurrency, at least I feel like there's some common ground there. 

What I would interject here and then leave you both to comment is that, this desire for it to be backed by something is entirely personal.  That's something you want, that's something Greg doesn't need, that's something I don't need.  Backed by maths is enough for me; being decentralised is enough for me.  And if enough people are on Greg's and my side of the fence, which exist, and less on your side, then you could be wrong in this game and then Bitcoin could end up becoming the leading currency.  So, this just comes down to a kind of personal preference by what your money is backed by?

Peter Schiff: First of all, why Bitcoin; why not Ethereum?

Peter McCormack: I mean, that's really easy to answer; that's a really easy thing to answer.  Firstly, Bitcoin is the most decentralised.  I mean, it's infinitely more decentralised than Ethereum.  It's also infinitely more secure than Ethereum.  I think it has a better base of developers, I think it is the most developed.  I go around the world with this and I see Bitcoin everywhere.  Ethereum to me is Vegas.

Peter Schiff: So, you think people who are buying it are making a mistake, and the fact that the price is going up just reflects the fact that they're wrong.

Peter McCormack: No, I think what it is is just a different point of view.  You and I have a different point of view of Bitcoin versus gold, and they have a different point of view, and this is just a race between those.  What I'm putting to you is that all these races are on at the moment.  Could you be wrong?  Can you see a future whereby, "Shit, I got this wrong, because people don't care about it being backed by gold"?

Peter Schiff: Well, I think they don't care about it now, because the price is going up.  I hear all the arguments about how it's so much better to have it backed by nothing, but they made that argument with the dollar.  When Nixon took us off the gold standard in 1971, they actually said that, "A dollar backed by nothing is better than a dollar backed by something".  Well, it turned out that that wasn't the case.  A dollar backed by gold had much more value than a dollar backed by nothing.

Peter McCormack: Why was that?

Peter Schiff: Because when it's backed by nothing, there's nothing there.

Peter McCormack: But isn't it down to the supply?  Because it's backed by nothing, they can print as much as they want.

Peter Schiff: Well, that's a good part of it.  And now you're going to say, "They can't print as much crypto, because they're capped at 21".

Peter McCormack: I am going to say that.

Peter Schiff: But the thing is, even though they can't make more Bitcoin, they can make other cryptos that are almost identical.  In fact, I could make something identical to Bitcoin; I would just call it something else.

Greg Foss: Who's going to use it, Peter, though?  It's about the network; again, it's about the value of the network.

Peter Schiff: So, they could build up another network, or they could piggyback it on the same network.  I mean, what network are all these other cryptos using?  I mean, they're all trading, people are using them.

Peter McCormack: No, he means the network effect, a bit like with the telephone.  The network effect of Bitcoin is the fact that you can go to almost any country in the world now and have Bitcoin liquidity.  You don't have that with other cryptocurrencies.

Peter Schiff: But did you have that ten years ago?

Greg Foss: That's why it's less risky now, Peter.

Peter Schiff: No, but somebody else could build up a network or use a network.  I mean, nothing is popular forever.  How do you know it's not a fad and people want something else?

Greg Foss: Maybe you don't.

Peter McCormack: In the future, it could be.  But the network effect we saw similar with Betamax versus VHS, right; and in the end, VHS won because of the network effect.

Peter Schiff: Yeah, and in the end, VHS has gone too, so who cares?  Who uses VHS?  They're all gone, so it doesn't matter!

Peter McCormack: In the end, gold might only be something that is used for industrial use, and it might be $200 an ounce.  I accept all of these scenarios.

Peter Schiff: But that one is far more remote than saying that some new cryptocurrency backed by nothing, that didn't even exist over a decade ago, is going to be around forever.

Peter McCormack: But here we are with it traded in nearly every country in the world with liquidity.  People accept it for payments in pretty much every country in the world.

Peter Schiff: Well, they're not really.

Peter McCormack: I know what you're going to say, but it's an emerging technology that's developing and growing, just like the internet was.

Peter Schiff: In fact I think, if you go back to the 2017 bubble, where that peaked out at $20,000, I think back then, there were probably more merchants that were saying, "Hey, we'll accept Bitcoin", than are today.  I think that it's actually gone down, that it peaked out, and people make fun of me for pointing this out.

Peter McCormack: I don't disagree.

Peter Schiff: You look on the web and you look at Google Trends, when was Bitcoin the most popular?  It was in 2017.  Fewer people are searching for Bitcoin now.  If this thing was going to keep growing and growing to the sky, it would be more popular now, more people would be learning about it than in 2017, but that's not the case.

Peter McCormack: I don't think Google Trends, people searching for the term, Bitcoin, is a good and accurate measure of how popular Bitcoin is.

Peter Schiff: Well, it's how many times people are searching for it, or searching "buy Bitcoin", or "Bitcoin", or whatever.

Greg Foss: Can I bring it back to a credit perspective, Peter McCormack, and talk about 30 years in the credit markets?

Peter McCormack: Of course, yeah.

Greg Foss: And I want to find common ground between the gold bugs and the Bitcoin bugs.  Peter Schiff, the reality is that countries default all the time.  In fact, in my career, Argentina has defaulted three times.  I got my start at the Royal Bank of Canada when we were dealing at the Royal Bank of Canada with a lot of American debt portfolio, that if it had been marked to market, would have vaporised our book value of equity.

Essentially, the Royal Bank of Canada, Canada's largest financial institution, was insolvent in 1988, hence the Brady Plan.  Now, the Brady Plan, Treasury Secretary, Nicholas Brady, wasn't designed for the Royal Bank of Canada, it was designed for all the US money centre banks that were in exactly the same position.  They needed a solution to the five-year loans they had made to lesser developed countries that had defaulted and were trading at 25 cents on the dollar.  Treasury Secretary, Nicholas Brady, came out with a brilliant plan that switched a 5-year loan to a 30-year loan, backed by US Treasury zero-coupon bonds.  Accounting gimmickry did not make them have to mark their books to market, preserve their book value of equity. 

The point is, in a capitalist system that's built on credit, you have tremendous risk that that system can fail at any time; it has three times in my career, the most recent was the COVID crisis and printing of money's the only solution.  It is the anti-fiat.  Much as gold is the anti-fiat, so is Bitcoin, but it's the anti-fiat for the technology savvy, for the people that are going to embrace this.  Now, can they both win?  Yes, they can.  But the fact is, over the last ten years, only one of them has truly lapped the course many, many times, and that's Bitcoin.  What you're saying is it can't continue, and I'm saying it can, because of this credit --

Peter Schiff: Wait a minute.  First of all, the Brady Bonds and all of that, none of that is capitalism.  And sure, capitalism is going to have successes and it's going to have failures, but those types of massive failures are not the fault of capitalism, they're the fault of government and government intervention in capitalism, and allowing capitalism to function.

Greg Foss: Correct, socialising losses.

Peter Schiff: So, it's not that capitalism is prone to failure; it's government that's prone to failure.  Capitalism is prone to success, but certainly there's always going to be people failing; that's the beauty of capitalism.  And it's the fear of failure that keeps people honest, and keeps people from taking excessive risks.  So, I agree with all that stuff.

But I think that the people who are choosing Bitcoin, I think they're making a mistake to think, is it an alternative to dollars?  I guess, but it's not a viable alternative, it's not a better alternative; I think it's like going from the frying pan into the fire.  I still think you've got fiat, except you're giving up some of the main benefits of fiat.

The only thing you have, in theory, is a limited supply, but supply means nothing if you don't know what demand is.  And, if there's no demand, even 1 Bitcoin is too many.  So, 21 million, I mean that's way too many if nobody wants them.  So, I don't want to gamble that there will be demand for Bitcoin in the future.  I don't think there will be.  I would rather own other things, I would rather own other assets.

Greg Foss: Would you ever admit you were wrong then, Peter Schiff, because at what point do you admit you were wrong if, God forbid, we all die and you're going to die some day; on your deathbed, will you ever admit that you were wrong on Bitcoin, because it is now ten times higher in the future than it is today?

Peter Schiff: Well, I certainly hope that on my deathbed, I'm not talking about Bitcoin!

Greg Foss: I bet you will be, only because I love your style, okay.

Peter Schiff: Here's what I would have to see.  In order for me to say, "Crap, I guess I was wrong", is that Bitcoin has to actually replace fiat currencies, and it has to be used as money in an economy, meaning you go out and rent an apartment, the landlord wants Bitcoin; the rent is in Bitcoin; it is expressed in satoshis per month, and you pay your rent in satoshis.  The landlord takes those satoshis and pays his property taxes, pays his mortgage, pays his electrical bills, because he borrowed satoshis.  He has a mortgage that's in satoshis.  You go out and buy insurance for your house, your premium is in satoshis.  Your benefits, everything, we're actually using satoshis. 

You go to the store, satoshis are the price, so nobody ever actually has to sell the satoshi; it's actually accepted as a medium of exchange, as a unit of account, as a store of value.  It proliferates as money at some stable price, where you now have a stable relationship between Bitcoin and everything else, every other commodity, everything else that you buy with Bitcoin.  If we develop a world where Bitcoin is actually money, whatever the -- I mean, the dollar value at that point will be irrelevant, because there won't be dollars anymore, we won't use dollars, we won't use euros; everybody will just be using Bitcoin.  And all these other cryptos will be gone too.

Greg Foss: Wouldn't you argue that it's a process though, Peter, and we're progressing on that path right now?

Peter Schiff: I don't see that we're any closer to that now than we were ten years ago.

Greg Foss: Okay, I think you need to open your eyes then.

Peter Schiff: No, all it is is more gambling, more speculating.  It's all pie in the sky.

Peter McCormack: So, Peter, I mean I don't understand gold particularly well, I don't look at it too much, but I understand some basics.  So, I think if I tried to explain it, you would have to correct me, and I think that's similar with Bitcoin in reverse, in that you certainly talk about that more than I talk about gold.  But I think there are some things that maybe you don't see or understand.  This is my job, I do this all day and every day.  We're certainly moving forward.

Where are we compared to where we were four years ago?  We have a more developed derivatives market which provides better liquidity; we also have a country where it's become a legal tender; we have services which allow people to spend Bitcoin; we have things that are now starting to be priced in Bitcoin, but are limited.

The problem with the unit of account argument, I would say, and I hope you're going to understand this, is that it's a currency that fluctuates against every other currency in the world, because it's a global currency.

Peter Schiff: Well, so does every currency; every currency fluctuates against other currency.

Peter McCormack: Yeah, but this is a global currency, whereas the others aren't global currencies, they're sovereign currencies.

Greg Foss: And on that basis, Bill Miller, famous US investor, he says, "Look, volatility is the price of return.  If you have something that isn't volatile, chances are the return on that is going to be very low".  Bill Miller, yes, embraces Bitcoin, but he also --

Peter Schiff: Yes, but volatility doesn't guarantee return.  Just because something is volatile doesn't mean it's going to go up.

Greg Foss: 100%.

Peter Schiff: It could just go down.

Greg Foss: Correct, but look, volatility is the price of return.

Peter Schiff: You can make money shorting Bitcoin, sure.

Greg Foss: When are you going to do that though?  You can't just talk that big game.  If you're going to say you're going to short it, you've got to do it, because that's what makes a market.

Peter Schiff: No, I didn't say I was going to; I said you could make money shorting it.  Look, I'm not shorting a lot of things that I think are overpriced.  I'm not short any stocks right now either.

Peter McCormack: That's fair.

Peter Schiff: I'm basically short the dollar by being long real assets.

Greg Foss: And so are we.

Peter Schiff: Well, you think you are.

Greg Foss: That's fair.  Look, we're team anti-fiat, and as Lawrence Lepard says, I'm going to borrow this from Lawrence Lepard, "If the gold bugs and the bitcoiners ever got on the same page, which I think is going to happen, we're all on team anti-fiat", and you don't put all your money on one resource, as Paul Tudor Jones says.  You own a bit of gold, you own a bit of Bitcoin; you are hedging against the fiat.

Peter Schiff: Yeah.  Paul Tudor Jones is buying Bitcoin like he would bet on a racehorse.  He thinks that it might make a move up.  Paul Tudor Jones is not one of these hodlers who is going to hold Bitcoin forever.  He will sell it.  He's buying Bitcoin as a trade, and when he thinks the trade is over, he'll get out.  So, he's not in it because he wants to marry Bitcoin; he's dating it, because he thinks he'll have a good time.

Greg Foss: Every gold bug says you have to have at least 10% of your portfolio in gold.  What do you put your other 90% in?  I mean, you guys have got to get some real conviction.

Peter Schiff: Exactly, I invest it.  I told you, I invest it mostly in stocks.  I own stocks and real estate; that's what I own.

Peter McCormack: Greg, Peter made a good point there, because there are a number of people who invested in Bitcoin this year who did exit near the kind of $55,000 to $64,000 range; a lot of people did.  I can't remember the name of the company, but the gold company in the UK, who bought a bunch of Bitcoin and exited it.  The point I want to make though, Peter, is that's that scenario.  There are also other people around the world who buy Bitcoin and hold onto it as an insurance against their local currency and will never get rid of it.  So, there's a range of people.

Peter Schiff: Well, I just think sometimes you have an insurance policy and the company that underwrote it goes bankrupt and your insurance is worthless.

Peter McCormack: Yeah, could be right.

Peter Schiff: If you own Bitcoin as an insurance, you'd better have some insurance for your insurance; maybe that's where gold comes in.  Maybe if you own Bitcoin, you'd better own some gold to insure your Bitcoin.

Greg Foss: I would not argue with that.  But the beautiful thing about Bitcoin is there actually is no counterparty risk.  That's why the decentralisation --

Peter Schiff: No, there is.

Greg Foss: What is there?

Peter Schiff: You depend on a counterparty to want to buy it.  It's all about the counterparty.  You need a counterparty to sell it.

Greg Foss: You know what counterparty risk is defined as?

Peter Schiff: Yes, I know what it is.

Greg Foss: Yes, so you're taking it out of context.  That is not the counterparty, that's a market risk, Peter, that is not a counterparty risk.

Peter Schiff: Yeah, well you need a new buyer.  A lot of people own Bitcoin through an ETF; there's a counterparty.  They're Exchange Traded Funds; look at Grayscale.  In fact, I hear all these Bitcoin people say, "We need more ETFs to make it easier to buy Bitcoin, because it's so hard to buy, it's so cumbersome, it's so risky, it's so expensive.  We need these ETFs so that more people can buy it", which undermines the whole argument of buying Bitcoin in the first place.

Greg Foss: Well, here's a neat thing.  Do you still have a Bitcoin wallet, Peter Schiff, or have you given up on it?

Peter Schiff: I have this one Bitcoin wallet that I have no ability to access.

Greg Foss: Would you get another one for me; would you do that for me?

Peter Schiff: For what?  I have no Bitcoin.

Greg Foss: So, I could send you some and then you can give it to Spencer.

Peter Schiff: You can send them to my kid!

Greg Foss: No, I already have.  But, here's the funny thing.

Peter McCormack: Hey, Peter, you need it more than Spencer!

Peter Schiff: I don't need it!

Greg Foss: I don't think he needs it.

Peter Schiff: But the problem is, he's not going to do anything with them; he's just going to hold onto them until they're worthless.

Greg Foss: Oh, this is so different.  This is a difference in cultural evaluation.  But, look, the mark of a great risk manager, Peter Schiff, and I'm going to dial back my criticism on you.  You have actually admitted that you will change your tune "if", and you laid out a bunch of scenarios that would have to happen.  I'm arguing that it's in the process of happening.

But the mark of a great risk manager, as you know, is to change their investment position when the facts change.  And you've basically admitted to me that there is a point at which you will change your investment position.  It may be so far in the future.

Peter Schiff: Yeah, if that happens, something that I don't expect to happen.

Greg Foss: Okay, kudos to you, sir, kudos.  Okay, good, but no one is certain.  You have to admit that the world is a probability distribution, and there's tail risks on all sorts of sides.  Hey, Peter McCormack, I'm happy that Peter Schiff admitted there is a scenario in which he will change his investment policy.

Peter Schiff: Is there one where you would change yours?  Is there one where you would abandon Bitcoin?

Greg Foss: Oh, yeah, 100%.

Peter Schiff: What would have to happen?

Greg Foss: Well, first of all, I would lose my conviction that fiat is the Ponzi, and I'm never going to lose that, because it's 100% mathematically certain that fiat will continue to debase.

Peter Schiff: All right, forget about fiat.

Greg Foss: Why?  That's how everyone values the unit of the world, it's valued in fiat.

Peter Schiff: No, I'm saying what could happen to Bitcoin itself that would make you change your mind about Bitcoin?

Greg Foss: Imagine that the blockchain does fail?  Imagine that it gets hacked?  I don't believe it will happen, but there is a miniscule chance.  Imagine, for example, that quantum computing hacks the Bitcoin blockchain.  I think we'd have huge other problems in the world, like every single other system that's based on SHA-256 encryption will be hacked before Bitcoin is.  But, yeah, it could happen.

Peter Schiff: What about price?  Is there anything on price, or is that irrelevant?

Peter McCormack: I think the price one's a tricky one, because if it hits certain price points, people will be piling in and buying it.  There are enough bitcoiners out there and enough liquidity, but it's a fair point.  If Bitcoin went under $10,000 and was sustained and stopped performing in the cycles it did, my conviction would drop.  I think there's a difference between fear and conviction.  I also think if there was a coordinated global regulatory effort to limit Bitcoin, that would be something that would change my conviction.  It wouldn't change my desire to work on Bitcoin, but it would change my conviction on it as well.

Greg Foss: I think that might make it more valuable, Peter McCormack, in that scenario, but who knows?

Peter McCormack: Yeah, potentially.  But I think we're in one of these typical Peter Schiff versus someone debate where we're recycling the same arguments; everyone's heard these all before and it's tough to convince Peter of something else and we don't need to replay them.  But what I want to do is focus on the common ground.

I mean, the common ground, which I think is progress, is the fact that you at least see the value of it as something which you can transfer permissionless and censorship resistant.  We have common ground in wanting to subvert the government.  We have common ground in seeing fiat as a Ponzi scheme.  It's just the general difference is what this cryptocurrency would be backed by.  We're happy with maths and your preference is something like gold, but a tangible asset.

Peter Schiff: Yeah, and an interesting point too is a lot of people in Bitcoin are trying to cosy up to the regulators, because they're trying to get Bitcoin more interjected into the mainstream investors.  They're trying to play down the fact that Bitcoin is a threat to the dollar.  They're trying to say, "Oh, no, it's not a threat to the dollar.  A single Bitcoin will help strengthen the dollar".

Peter McCormack: That's what Michael Saylor said, you're referring to there?

Peter Schiff: Yeah, Michael Saylor and several other guys, that are trying to get portfolio managers to buy, trying to get the institutional mind to come in and trying to get the regulators to bless it.  They're basically trying to dial back all that by saying, "Hey, it's just another asset.  It's going to make the dollar even more valuable, even more popular, because you're embracing crypto".  I mean, they're trying to basically take everything Bitcoin was supposed to be and basically say, "Oh, no, it's nothing like that; it's this brand-new thing".  They're reinventing it to create the appeal.

What their real concern is, their real motivation is, they just want more buy-in, they want the price to go up and they want the institutional money to drive it up.

Peter McCormack: That's not true.  What I want to put in there is actually, not all bitcoiners are equal, not everyone thinks that; probably not all gold bugs are equal.  Some gold bugs are pro-Bitcoin.  A lot of the work I'm seeing down there in El Salvador isn't people who want to cosy up to regulators to get more institutional investors in.

I understand Saylor does, yeah, he's put himself under a lot of pressure with the amount he's bought, but not everyone agrees with him.  A lot of people down here actually just want to bring money to a country which brings a certain amount of freedom that they don't have, because of the infrastructure down here in El Salvador.  I'd love to bring you down here, let you see it, see first-hand what's being done.

Peter Schiff: Well, I know, I could hop on Brock's plane and fly down with him.  In fact, I know they're planning this big drone show.

Peter McCormack: Brock Pierce isn't a bitcoiner.  Let's just forget Brock Pierce now.

Peter Schiff: Well, he's into everything, but he's into Bitcoin, he's into other cryptos.

Peter McCormack: Yeah, fuck that guy.

Peter Schiff: But he's going to be down there in El Salvador.

Peter McCormack: And no one gives a shit!  Sorry, I'm just not a fan of the guy.  But what I would say is that there's lots of stuff being done here that does make lives a bit better.  I will bring up the remittance point.  I know you said it's only $5 to use Western Union, but it's $0 to use Strike, and you also don't have to go to Western Union, you can be sat on your couch and receive it.

Peter Schiff: But can you transfer dollars via Strike?

Peter McCormack: The great thing on Strike, you can transfer Bitcoin, or you can transfer dollars.

Peter Schiff: Well then, why not just transfer dollars?  Problem solved.

Peter McCormack: Well, some people do, but there isn't an international Venmo available now which does an instant and near free, or free, settlement of dollars across the US border from El Salvador and families to people who live in El Salvador.  So, they do have this new innovation where they can send $1 and that person can go to the shop and spend that $1 and there's no fee.  And they don't have to go to Western Union.

Peter Schiff: Well, I think that's good, but what does it have to do with Bitcoin?

Peter McCormack: Because that exists on the Bitcoin Network.

Peter Schiff: All right, it's on the Bitcoin Network, but it's not Bitcoin.  They don't need to make Bitcoin legal tender; they can keep using dollars.

Peter McCormack: Yeah, but some people choose to hold some of it in Bitcoin, so you've got that optionality of both.

Peter Schiff: They'd be better off if they held it in gold or something else.

Greg Foss: How can you say that with 100% certainty?  You cannot say that with 100% certainty, Peter, you know that.

Peter Schiff: Well, over a long time period, yes, I can.  I'm 100% certain.  I could be wrong, but I'm 100% certain.

Greg Foss: I love you, "I could be wrong, but I'm 100% certain"!  That's not a risk manager; that is someone who's stubborn.

Peter Schiff: Look, I'm certain that the earth's not going to be invaded by aliens during my lifetime, but I could be wrong!

Peter McCormack: I mean, didn't we see the videos that they already have?  Okay, listen, to save us going round and round in circles, I actually think this was progress.

Greg Foss: I do too.

Peter McCormack: I think the reason, Peter Schiff, that people care about this is that sometimes, when you debate Bitcoin, you say things that just factually aren't true.  But also, I'm willing to admit you get things right that bitcoiners won't admit.  I also think you make really valid points, because I see it here on the ground.  But I would just hope that -- I'm going to give you both closing remarks.  This wasn't so much a moderated debate, it was me and Greg versus you.

But I would just ask you personally to spend a bit of time looking into the human rights' aspects of Bitcoin, some of the freedoms that it brings people in the world, because I think there's enough value in that and that is the thing that gives Bitcoin a lot of value.  And I'm going to give you both a chance to close out.  Greg, I'll let you go first, because Peter went first last time.

Greg Foss: Okay.  Well, thank you for having us and, Peter Schiff, I have to say it's actually been a pleasure to speak to you in person.  You have measured responses, you are a risk manager that views the upside, or the asymmetric return in Bitcoin as being infinitesimally small, but you don't say that it's zero, so on that basis I'll give you kudos.  Thanks for having me as a guest.

I want to just throw out, seven people in our business, and I say "our" business, it's my former business, but Peter Schiff's business of managing money; they have embraced Bitcoin and I think that this is valuable.  Paul Tudor Jones, Stan Druckenmiller are well-known.  One that's not as well-known is a gentleman by the name of Steve Tannenbaum, who runs a $45 billion dollar credit-focused hedge fund called Golden Tree.  And Steve Tannenbaum, who is incidentally probably the smartest guy I've ever met in the credit markets, he has embraced Bitcoin as a percentage allocation in his credit portfolio.  So, those are hedge fund guys.

Asset management guys, Bill Miller and Tim Draper, very famous; they view Bitcoin as having a place in a diversified investment portfolio.  And they're gold bugs, Peter; this is important, because these are guys in your backyard.  Lawrence Lepard, I've already mentioned, but Luke Gromen, I was on a panel with him down in Bretton Woods, New Hampshire a couple of weeks ago; very impressive guy.  He talks the same language you do, in terms of fiat being broken, in terms of things like creative destruction not being available in true capitalism anymore, and it's more like socialised losses when you talk about Brady Plan and you talk about the long-term capital management.

So, those are traditional asset managers, hedge fund guys, gold guys.  And then you have the Michael Saylors and you have the Jack Dorseys, the guys that are visionaries from a technological side.  And all I would say is, for people listening, thanks for listening up until this point.  I always view everything as being a probability distribution, and I still view Bitcoin as being the best asymmetric return opportunity I've seen in 32 years of managing risk.  That doesn't mean I don't own gold, okay.  I own some gold as well and I own other hard assets, like real estate and equities. 

I do not own any bonds.  Bonds are the most foolish fiat contract I have ever seen in my last 30 years and that's why, because rates are administered.  Administered rates are being manipulated lower and you are not being paid for the credit risk, nor the interest rate risk that you are incurring by owning a bond.  So, people that own bonds out there, those are the people that should be considering an allocation to Bitcoin if you have no Bitcoin.  And if you have no gold as well, but you own bonds, you'd better do some maths, because you have failed grade-11 maths if you still own your bonds in this scenario.

So, thanks for having me.  Peter Schiff, I look forward to talking to you again.

Peter McCormack: Thanks, Greg, and Peter?

Peter Schiff: Yeah, I certainly agree with you on bonds.  They are a massive bubble, they are a return-free risk and they're probably the worst asset class that people could be in, certainly the US.  So, to the extent that you're going to be in bonds, you've got to find some of the emerging market currencies, shorter durations.  But yeah, I prefer equities and equities will actually benefit from inflation, because they borrow money and they get to screw the bondholders when they pay them back in cheaper money, and they have real assets there.  So, that's one area where we can agree.

I also agree that I want the world to be freer, I want less government, I want more prosperity.  I just don't think that you have to introduce Bitcoin to achieve that.  I think it's unfortunate that all the effort and all the energy that is being spent on Bitcoin and promoting Bitcoin, I would much rather see that be used to promote legitimate hard money, which would be gold, which would be a viable alternative to the fiat system we have now.  Let's return to a system that's worked in the past, not one that's probably going to fail in the future.

Yeah, you could point to a handful of people, some of them very smart, very wealthy people, who have embraced Bitcoin.  I could point to an even larger number of smart people who have stayed away from it for the same reasons that I have.  And the thing with a lot of these guys that are behind Bitcoin, again we don't really know what their motivation is, what their agenda is; because, once you buy Bitcoin, you've got to talk it up.  That's almost like, "Okay, I buy it, now I've got to tell everybody how great it is and how much I love it and how I'm never going to sell", because they want the price to go up.

A lot of these guys could be pumping it for a future dump.  You don't really know what their real agenda is.  They could just be trading Bitcoin.  They've embraced it because they think they can sell it to a greater fool, and maybe they're not a fool, because they're convinced that there are fools out there that will pay a higher price and they will do what they can to help generate the interest that may help produce that.  So, I don't know, maybe half the people really believe it and they're in it for the right reasons, as you might want to say; and maybe the other half are just there, because they think they can make a quick buck and go right back to fiat. 

But just because you have some people that are in; there were smart people who did a lot of foolish things during the dotcom bubble, they did a lot of foolish things during the housing bubble, and there are smart people during foolish things during the crypto bubble.  Some of those people will make money, some of them have made money; but at the end of the day, it's the people who don't sell who are going to be the bag-holders.  Their losses are going to equal the early people's gains.  In fact, it's a negative-sum game, because of all the costs involved in all the trading, but it's the people that get out that are going to make the money, not the people that are stuck hodling.  They're just the bag-holders.  They've lost money.  It's a huge transfer of wealth from the people who buy Bitcoin to the people who sell it.

Peter McCormack: Well, listen, appreciate you both coming on.  I think we made some progress today.  I think we're closer than we think on many subjects, and even on the subject of Bitcoin.  I think you make some very valid points with regards to bitcoiners, Peter.  I sometimes cheerlead it myself and feel the need to step back and be a bit more objective.  I've just released a show with Lyn Alden today, where we looked at criticisms, and I think that's some valid work.  Love you both, really appreciated this, I think this was awesome.

Peter Schiff: It went longer than I thought.

Peter McCormack: Yeah, me too!  I thought we'd do an hour!  But I think people will really enjoy this and I look forward to doing it again in the future.  Peace out to both of you.

Peter Schiff: All right, take care everybody. 

Greg Foss: Thank you, thank you, Peters.

Peter Schiff: I'll see you in Puerto Rico.

Peter McCormack: Oh, look, that might happen!

Peter Schiff: Look me up when you get here!

Peter McCormack: I will hit you up!