Just a few days back, Peter Schiff, a popular Bitcoin pessimist & investment manager criticized El-Salvador’s president Nayib Bukele after he tweeted about buying additional 150 Bitcoins on Saturday’s correction.
The president of El Salvador revealed further that his country holds 44,106 oz. of gold in its reserves which has lost value by almost 0.37% over the past year.
He told Peter Schiff that if El Salvador had sold its gold and bought Bitcoin last year, it would be worth $125 million more.
El Salvador bought the dip on Saturday morning when the price of Bitcoin fell from $52,000 to $44,000. Schiff asked Bukele, “How much Tax Payer’s money do you intend to waste?”.
The president replied, “None” and emphasized already being in the green from the last four purchases in less than 24 hours.
A similar comment was made by Microstrategy CEO Michael Saylor in September. Saylor revealed had he chosen gold instead of bitcoin, it could have been a multi-billion dollar mistake.
In the latest SEC filing, Microstrategy revealed its net holding of over 121,044 Bitcoin on November 29th worth $3.57 billion dollars.
Microstrategy CEO said in an interview with CNBC, that he believes Bitcoin isn’t the only cryptocurrency to have a bright future.
He added that every other coin has a different utility and there is a space for every token in the market.
Coming back to Peter Schiff
El Salvador made bitcoin a legal tender despite (International Monetary Fund) IMF warning on the same. Schiff on the flip side has been a long-time pessimist on the future of Bitcoin.
On a podcast, I remember Schiff recalling people who pitched Bitcoin to him back when it was worth $10.
He admits his fault of not foreseeing so many people holding Bitcoin. Even though he thinks he missed the bus, now he thinks Bitcoin is a bubble and would eventually go to zero. Peter Schiff has been a longtime fan of Gold & people know him as Gold bull.
Schiff compares Bitcoin to the early Dotcom bubble & the 2008 Housing Bubble in the US. He thinks that there are a lot of smart people on the side of Bitcoin, but he adds that the same was true for Dotcom Crash and Housing Bubble.
According to Schiff, Bitcoin stands nowhere in comparison to the 5000-year-old yellow metal and can’t be considered as a store of value. “Gold has a temporary downturn since people think Inflation is transitory”, adds Peter Schiff.
Is Bitcoin a bubble?
Economic bubbles are formed when people overbuy the asset/commodity based on speculation without judging the underlying value. While that is true for tulips we can’t say the same applies to Bitcoin.
When you have hard money like Bitcoin (21 million to be exact), it is actually hard to put a valuation over the asset with a small community of people. The volatility and price fluctuations happen because of lower volumes compared to Gold.
Gold is far widely adopted by humans, unlike Bitcoin which is owned by only about 22% of the adult population on our planet.
At the time of writing this article, countries are still figuring out how to regulate Bitcoin as an asset class.
Being deflationary by nature, investors on Twitter expect the price to reach as much as $1 million USD in the future. That number may seem like a fairy tale but no one knows what will happen when more people join the network.
Because of the Internet, the crypto revolution is spreading faster than ever. When you’re in Bitcoin, nobody can dilute wealth by printing more Bitcoins. The same applies to Gold, Silver & other precious metals.
Advantages of Gold
- Gold has been tried and tested for centuries by humans. It has survived catastrophic events in the past and has found value among people as a medium of exchange, store of value, jewelry, electrical circuit manufacturing, etc. Humans love Gold.
- Central banks hold Gold in the treasuries as collateral to hedge against the fiat-based monetary system. Although the paper isn’t 1:1 backed by Gold, banks hold it as a safe haven for future crises.
- It is recognized globally by everyone. Gold has the same value be it in India, the US, China, Europe, and other countries.
- Can’t be manufactured artificially.
Disadvantages of Gold
- Is not divisible like Fiat Money. People can’t use Gold as a currency to pay for day to day goods and services.
- Cannot be transported easily from a location to another.
- Has a risk of getting stolen if kept outside safe custody.
Why I think Bitcoin is superior?
Bitcoin covers all the advantages and disadvantages of Gold into a transparent, decentralized digital currency.
As an investor, I’m not telling anyone to go all in Bitcoin today but having a moderate 5% to 10% exposure should be considered healthy if you have a high risk appetite in your early 20s.
Gold shouldn’t be completely neglected either. As an Indian, I love holding Gold physically.
A 5% exposure on the yellow metal can hedge currency devaluation and stock market crash. Both are necessary to have a well-balanced portfolio.
Will Peter Schiff ever stop Criticising Bitcoiners?
Before answering the question, I want to share a point of view.
There are people who like the idea of a Decentralized currency free from corruption and bad activities. Also, there are people who think all of this is hype and will fall apart someday.
Even there are more people who feel safer & in control with a Government-issued currency. Some critics are also there who think of it as a corrupt piece of paper.
My point here is that everything has two sides like a coin. Nobody is right or wrong, it is all about the perspective of an individual and what he/she thinks is money.
The bad thing though is being a hardcore pessimist about the other end. Peter Schiff definitely falls into this category. He comes every day on Twitter and shares his point of view about Bitcoin to prove his point of being right about Gold, just like Michael Saylor who tries to show being right about Bitcoin.
Should that concern you while buying an asset like Gold or Bitcoin? Absolutely not. Always take the last call from your end.