“Bitcoin is not a store of value.”

Initial Claim:
@25:24 - 26:17

Peter Schiff: "When you buy Bitcoin, it's not providing any service. It's not satisfying any of your needs or desires."

Anthony Pompliano: "It's providing cryptographic security."

Peter Schiff: "But security of what? You've secured nothing. Yes, I mean, I could even concede potentially that... if I own a Bitcoin, no one's going to steal it. But if I have nothing, then what difference does it make whether someone steals it or not? I mean it only has this value to the extent that someone else believes that they're going to get rich by buying it. And again, y'know, you don't want to confuse (because you said earlier that [Bitcoin is] a store of value)- I will concede that the price of Bitcoin has gone way up, buy you can't confuse "price appreciation" with a "store of value." Anything that can go up can also come way down, as we've seen before. I mean Bitcoin has had some spectacular declines, and so there's a lot of volatility there."

P1. If an asset has risen in price because of purely speculative hopes, then that asset is not a store of value.

P2. Bitcoin has risen in price because of purely speculative hopes.

Therefore:

C3. Bitcoin is not a store of value.

Evaluation:

P1. Agree. If an asset has risen in price because of purely speculative hopes, then that asset is not a store of value.

P2. Disagree. Bitcoin has risen in price because of speculative hopes, for sure (and we might call that an "offensive" use case), but Bitcoin has also risen in price because of increasing demand for its utility (which we might call a "defensive" use case):

Bitcoin's utility is appealing to people who have been (or might be) the victim of theft, extortion, censorship, restriction, inflation, marginalization, suppression, surveillance, or another form of financial oppression. Bitcoin stops third parties - including corporations and governments - from oppressing its users.

Therefore:

C3. Disagree. Bitcoin enables its users to "store their value" outside the reach of individuals and institutions.

“Bitcoin will be overtaken by a better cryptocurrency.”

Initial Claim:
@22:53-23:34

Peter Schiff: "Even if you assume, "okay, cryptocurrencies are going to work," I cannot think of an example throughout history where any innovation- where the first one was the best one, right? Whatever was invented, whether someone invented the telephone- the first telephone was not the best telephone - it's been improved upon. The first television, the first automobile.

So if cryptocurrency would work, why would we assume that Bitcoin is the one that's going to succeed? Why would the first attempt be the best attempt? Why wouldn't somebody come up with something better, that's quicker, that's more reliable, that's more secure than Bitcoin? And if somebody can do that, then it renders Bitcoin worthless because there's something better."

P1. It is extremely unlikely that the first version of a product is the best version of that product type.

P2. Bitcoin is the first version of a product type.

Therefore:

C3. It is extremely unlikely that Bitcoin is the best version of that product type.

Evaluation:

P1. Agree.

P2. Agree.

Therefore:

C3. Agree.

P4. If someone invents a superior version of Bitcoin, then Bitcoin will be worthless.

P5. Someone will invent a superior version of Bitcoin.

Therefore:

C6. Bitcoin will be worthless.

Evaluation:

P4. Disagree. This Premise assumes that only ONE product can retain value in a given marketplace (which requires that all consumers switch to using the one, single, "best" product), which is a False assumption.

Clearly, there is more than one type of telephone that exists today, just as there's more than one type of television, type of automobile, and type of money.

In all likelihood, many cryptocurrencies will exist simultaneously, each with a different use case, market segmentation, and market capitalization.

If someone invents a "superior" version of Bitcoin, then Bitcoin will become less valuable.

P5. Dubious. The label of "superior" is completely subjective, and every product-maker (in every market) must consider various tradeoffs in product design and functionality.

In cryptocurrencies, there is a 3-way tradeoff among security, scalability, and decentralization - you can pick at most two. Bitcoin attempts to have "unrivaled" security and decentralization, and it chooses to sacrifice its scalability. Other cryptocurrencies attempt to favor scalability, for example, at the expense of either security or decentralization.

Therefore:

C6. Agree, but for different reasons.

Bitcoin will become "less valuable" if and when a "superior" version is released.

Bitcoin will become "worthless" when its utility disappears (i.e. its security is compromised). This will not be a function of the competitive landscape (e.g. "other cryptocurrencies"), but rather the technological landscape (e.g. "disruptive technologies," such as quantum computing).

“Bitcoin has no intrinsic value.”

P1. Anything with no intrinsic value is essentially worthless.

P2. Bitcoin has no intrinsic value.

Therefore:

C3. Bitcoin is essentially worthless.

Evaluation:

P1. Disagree. Suppose we define "intrinsic value" as "the benefit derived from the minimum functional properties of an asset that are universally recognized and broadly applicable." In other words, "intrinsic value" is the "objective functionality" of an asset. That seems fair, but this definition causes us to dismiss other kinds of value as "worthless" (such as aesthetic or sentimental value), and clearly those types of value are not worthless.

If we expand the definition of "intrinsic value" to include aesthetic or sentimental value, then we've introduced subjectivity into the core value of something. Since subjective value, by definition, is a matter of opinion, and since we cannot make claims about other people's opinions, then the presence of subjectivity prevents us from making claims about this kind of value.

Hence, this latter definition of intrinsic value (that includes subjectivity) leads to a False Premise because it precludes us from making claims about other people's value, and the former definition of intrinsic value (that is strictly objective) also leads to a False Premise because it ignores a very real component of value (i.e. aesthetic or sentimental value).

Either definition of "intrinsic value" leads to a False Premise, so I Disagree with Premise 2.

P2. Disagree. Bitcoin does, in fact, have intrinsic value. In order for you to "have" a Bitcoin, the Bitcoin network must acknowledge that you have custody of that Bitcoin (i.e. you must supply a valid private key to claim ownership of a balance in a public address).

If you can demonstrate ownership, then you can transfer ownership - without any additional permissions or paperwork. The two functions (demonstrating and transferring ownership) are "structurally connected."

The intrinsic value of a Bitcoin, therefore, is the ability to establish and transfer ownership of digital assets on a globally-recognized and un-cheatable ledger. In other words, once you own something on the Bitcoin network, nobody can take it away, except you (either your own choice or your own negligence).

Another way to consider this intrinsic value is that each Bitcoin user has the same "power" and "sovereignty" as the other users. There is no hierarchy of power - such as authoritarian governments, remorseless corporations, and powerless individuals - there is only a public address with a private key, and everyone on the network is the same. It is an amazing environment of equality, and it's built into the network - if you "have" a Bitcoin, you "have" this equality.

Therefore:

C3. Disagree.

“Bitcoin is just another fiat currency.”

Initial claim:
@14:20 - 15:36

Anthony Pompliano: "Money is just a belief system, right? So a "medium of exchange" is simply valuable because both parties agree [that it's valuable], right?"

Peter Schiff: "Not real money. You're talking about fiat money. You're talking about paper currency that governments create out of thin air. There, [with paper currencies] the value's derived from faith and confidence, but it also has the backing of the government that issued it, and the fact that each government demands that its citizens pay taxes in that currency that it creates, which means that there is a demand among the citizens to accumulate that currency in order to pay those taxes.

And because of that, all of the contracts are denominated in that - employment contracts, rental agreements, bonds, insurance contracts - so everybody starts using it, but ultimately if the government abuses the privilege of creating it, and it creates too much, it collapses in value because the confidence is destroyed.

And Bitcoin has much more in common with a fiat currency than it does with gold, because gold's value is derived from its physical properties that make it desirable and make it useful, whereas Bitcoin's value is derived from the confidence that people are going to want it in the future even though it has no physical properties or any other properties that you could use it for."

P1. If a "medium of exchange" derives its value from its physical properties, then it is "real money."

P2. Gold is a medium of exchange that derives its value from its physical properties.

Therefore:

C3. Gold is "real money."

Evaluation:

P1. There's a lot to clarify here, but such clarification is not essential to the main argument, so let's assume that I Agree with this Premise.

P2. Again, we could clarify this, but it's not essential, so let's assume that I Agree with this Premise.

Therefore:

C3. Agree. Gold is "real money."

P4. If a "medium of exchange" derives its value solely from the "confidence" that people are going to want it in the future, then it is "fake money."

P5. Bitcoin is a medium of exchange that derives its value solely from the "confidence" that people are going to want it in the future.

Therefore:

C6. Bitcoin is "fake money."

Evaluation:

P4. Let's suppose I Agree.

P5. Disagree, but if we include a very important addition, I would Agree:

Bitcoin is a medium of exchange that derives some of its value from the "confidence" that people are going to want it in the future.

Consider that a holder of any non-consumable asset - e.g. stocks and bonds, but also gold and Bitcoin - is reasonably "confident" that people are going to want that asset in the future.

This confidence is a component, but not the entirety, of each asset's value.

  • A stock typically entitles you to a share of a company's profits, and perhaps voting rights on future corporate actions, AND you're "confident" that people will want that stock from you in the future.
  • A bond typically entitles you to a stream of future interest payments from a counter-party that you believe to be creditworthy, AND you're "confident" that people will want that bond from you in the future.
  • Gold can be used in numerous commercial and industrial applications, AND you're "confident" that people will want that gold from you in the future.
  • Bitcoin can be used to prove ownership, protect ownership, and transfer ownership without permissions or restrictions (resulting in economic equality and self-sovereignty among participants), AND you're "confident" that people will want that Bitcoin from you in the future.

Bitcoin is a medium of exchange that derives some of its value from the "confidence" that people are going to want it in the future.

Therefore:

C6. Disagree. Bitcoin is not "fake money."

P7. Eventually, the value of "fake money" will collapse when confidence is destroyed.

P6. Bitcoin is "fake money."

Therefore:

C8. Eventually, the value of Bitcoin will collapse when confidence is destroyed.

Evaluation:

P7. Agree. Eventually, the value of "fake money" will collapse when confidence is destroyed.

P6. As we discussed above, Disagree. Bitcoin is not "fake money."

Therefore:

C8. Disagree, but if we include a very important addition, I would Agree:

Eventually, the value of Bitcoin will collapse when (1) its utility disappears AND (2) confidence is destroyed.

In the short term, macro and micro factors will increase and decrease the overall "confidence" in the Bitcoin network, while the "utility" of a Bitcoin remains unchanged.

In the long term, something will undermine the integrity of the Bitcoin network (e.g. breaking the hashing algorithm, a 51% attack, etc.), and the "utility" (i.e. security) of the Bitcoin network will disappear. When this occurs, people will lose confidence in Bitcoin rapidly, and the value of Bitcoin will collapse.

The same process will unfold in other asset classes (e.g. stocks, bonds, and gold), but on very different time scales (e.g. decades, centuries, or millennia).