Is Bitcoin only a speculative instrument or a real currency


There is a debate in the finance community about whether or not Bitcoin is a speculative instrument or an actual currency.

In a rare collision of the two sides of the argument. Each man is at the most extreme end of the spectrum of the argument.

Peter Schiff and Max Keiser had an impromptu 15 minute exchange at a recent financial conference.

Both men make interesting points in their arguments.

Max Keiser starts the conversation by arguing that the move to Bitcoin is essentially a move away from fiat currency.

Peter Schiff had an interesting response by saying that moving from fiat government issued currency is like moving ‘out of the pan and into the fire.’ Schiff starts his retort by stating that government issued fiat currency is not backed by hard assets such as precious metals. However, government issued fiat currency does have the advantage of being the only asset that the government accepts. For instance you cannot purchase government issued bonds or pay taxes with Bitcoin.

Keiser then argues that crypocurriences such as Bitcoin are backed by the work of cryptographers. He also argues that crypocurriences are backed by their scarcity.

Schiff believes that very few merchants price their merchandise in Bitcoin without the intention of converting the Bitcoin into dollars or other government issued currency.

He says the reason it is a bubble is that it is solely a speculative instrument backed by the faith of the investors that the value will continue to rise simply because of its scarcity.

Then Schiff makes a great point that Keiser cannot answer.

What is keeping somebody from coming along and making a better version of the Bitcoin and then Bitcoin becomes obsolete overnight. Just because Bitcoin was first does not mean it will forever be the best. Think of Friendster or Atari.

Schiff ends the conversation by saying that gold and silver have real uses in the real world. They are used in merchandise that can be bought and sold physically.
I personally would argue that blockchain technology does have real uses in the real world beyond Bitcoin. However, that does not speak to Bitcoin’s value.

It is an interesting discussion that I think will continue to heat up as Bitcoin soars higher and higher. Are Bitcoin and crypocurrencies in general the biggest bubble the financial world has ever seen? Or will it stabilize into a real currency, embraced by primarily by millennials?

Time will tell but for now it seems like more and more are hopping on the Bitcoin train.

Here is the full debate: