Bitcoin Minute: Rethinking the Bitcoin vs Gold Debate

LIMITED TIME
Help support independent Bitcoin and Macro analysis!

Jack Mallers and Peter Schiff debated Bitcoin vs. gold on David Lin's YouTube show, released within the last 24 hours. Clips of Mallers’ takedown of Schiff and Schiff's tired arguments are all over X today. I thought I'd give my written response to both and follow it up with a short livestream soon.

Here is the original video, with short clips below. 👇

Schiff's Decade Old Debunk Talking Points

Let's break down his points first, because he smashes together many common troupes about Bitcoin.

1) Bitcoin is not scarce because there are infinite numbers of tokens.

Try sending other tokens to settle a Bitcoin transaction—they are cryptographically and mathematically nonfungible. Bitcoin offers nearly perfect confidence against counterfeits, unlike gold, which can be gold-plated tungsten, fool's gold, or various karats (12k instead of 14k, or 20k instead of 24k).

There will only ever be 21 million bitcoins, and you cannot pass off other tokens as counterfeits.

This argument is like saying the supply of gold isn't limited because there’s silver, copper, nickel, tungsten, etc. Any idiot can see those things are not the same, yet Peter tries to make this claim about Bitcoin.

2) Bitcoin does nothing; it is just a string of numbers.

True, but that's what money is supposed to be—an indirect good (demanded not for itself, but for what it can be exchanged for in the future). Money is not meant to be consumed during use, as that would make it a poor store of value.

Any utility value of a money (like gold in jewelry or dentistry) distorts prices in a modern economy. Utility for purposes other than money distorts pure supply and demand for its role as money.

Bitcoin is a string of numbers within the context of a network. You cannot separate the two conceptually—they are one. That string of numbers is weight on the network.

3) 21 quadrillion satoshis.

I don't think I need to address this in depth. Divisibility is a benefit for a currency, allowing for finer pricing. The more easily divided and verified, the lower the transaction costs (system-wide use cost). You don’t increase the supply by cutting something into smaller pieces. This is a quick way to sound unintelligent.

4) "Things have value for the things that they can do and the benefits you derive from using them."

This contradicts Schiff's own intrinsic value argument, which claims value is inherent in the good itself. Of course, there is no such thing as intrinsic value—value is based on supply and demand.

5) "The only benefit someone hopes to get from Bitcoin is getting rich when it goes to the moon."

This is a straw man. While speculative interest in Bitcoin exists (as with all asset purchase decisions), there are also arguments for the benefits of Bitcoin as sound money. Peter, as a gold bug, knows these arguments well. Bitcoin is better gold, and the reasons people stubbornly hold onto gold are the same reasons they hold Bitcoin. He’s essentially arguing against himself here. He might say, "But gold has utility value," but that’s not a reason to hold it as a store of value.

6) More people who own bitcoin now have lost money now than made money.

This is empirically false. The Realized Price (the market price of each UTXO the last time it was transacted) serves as a basis value for all Bitcoin. It’s currently around $31,000.

His last few points are venomous attacks—no need to cover his price predictions.

Jack Mallers' Finality and Network Arguments

Jack does a great job keeping his cool during Peter’s delusional attacks on Bitcoin. However, I have some academic disagreements with him as well. Let’s go through them.

1) "The real problem with gold is, unfortunately, it has to centralize."

No, scaling alone is not enough to pressure gold into centralization. Gold can scale to a global, peer-to-peer network, as it did for hundreds of years. However, such a system would only be minimally complex, leading to mercantilism and other economic patterns seen when using physical metals. Everyone in the world recognized and used silver and gold for millennia (arguably more universally than the USD today), but the type of economy it fostered was agrarian and subsistence-based.

This is a key point that needs to be discussed regarding Bitcoin if we want to make successful predictions about future adoption.

Gold didn't fail because of a lack of scale or its tail emission; it failed because it was too inelastic for the specific circumstances of the time. Elastic, credit-based money allowed for the outrageous growth of the last 75 years.

Those circumstances are changing rapidly, and the downside of elasticity—namely, shortages at the end of bubbles—will push people toward inelastic money. The world would revert to gold if it weren’t for Bitcoin. Bitcoin is simply a superior form of sound money compared to gold.

2) Gold requires trust, that is why it failed.

It just so happens that the period of greatest trust in the international system—when global buy-in to the UN, WTO, IMF, BIS, World Court, human rights, the revised Geneva Conventions (1949), amongst other things, occurred—was the very period when gold went out of use.

In a way, Mallers’ argument is backward. Gold and sound money work best in periods of low trust. In such times, the public prefers sound money, even if governments may still seek credit to fund wars (a topic for another post).

However, in high-trust periods, demand for credit increases, and the inelasticity of sound money falls out of favor.

In the distant future, when the economy is booming and trust is widespread again, Bitcoin may lose out to more elastic forms of money, perhaps a Layer 2 derivative followed by a complete unmooring—similar to what happened to gold. It’s not hard to imagine. However, such periods of high trust, low debt saturation, and technological productivity are rare in human history. So rare, in fact, that the last 75 years are nearly unique.

Conclusion

While Peter Schiff continues to rehash outdated and flawed arguments against Bitcoin, Jack Mallers offers a strong defense with solid points about Bitcoin’s superiority as sound money. However, even Mallers’ arguments could be refined along more historical monetary cycles. We must not only answer why Bitcoin (because most of those arguments are a marginal improvement on gold), we must answer, "Why now?"

Ultimately, Bitcoin is superior sound money for a period of declining economic vibrancy and growth.

Hope this helps someone.

Your support is crucial in helping us grow and spread my unique message. Please consider donating via Strike or Cash App or becoming a member today and get more critical insights!
Follow me on X @AnselLindner.

LIMITED TIME!
50%-off FIRST MONTH!
Support independent Bitcoin and Macro analysis!

Hold strong and have a great day,

Ansel

• Were you forwarded this post? You can subscribe here.
• Please SHARE with others who might like it!
• Join our Telegram community
• Also available on Substack.

Disclaimer: The content of Bitcoin & Markets shall not be construed as tax, legal or financial advice. Do you own research.