Podcast

Biggest mistake Boomers make about Bitcoin, Confuse it with Crypto - E242

A podcast episode reacting to common criticisms of bitcoin from a financial professional who just doesn't get it yet.

Member video version: https://bitcoinandmarkets.com/e242-video/

In this reaction video I listen to a segment of a Lance Roberts morning show available on YouTube. It's a radio show out of Texas that discusses investing and personal finance. I'm a fan of the show, and think they usually do a good job evaluating the stock market and basic market sentiment.

However, in this particular segment, Lance attacks Bitcoin from a very naïve angle and I had to set the record straight.

Cryptocurrency or Bitcoin?

First, I take on his use of the term "cryptocurrency" right out of the gate. I don't think he could define it other than to say, bitcoin and things like bitcoin. But, Bitcoin is not crypto, and crypto is not Bitcoin. Almost all criticism leveled at Bitcoin is intended for crypto scams, not Bitcoin. Lance is guilty of that here.

Next, I discuss one of my pet peeves that Lance propagates here. He calls the dollar and bitcoin "fiat" currency. Fiat is very specific thing, it is a currency that is not backed by anything making its supply completely dependent on a ruler/government. The dollar is not a fiat currency.

For one, the dollar is backed by credit and low, stable counterparty risk. Secondly, its supply is not dictated by the government (or the Fed). Reserves printed by the Federal Reserve are not a medium of exchange like a dollar bill. Fiscal spending is not printing money either, it is simply borrowing, or pulling demand forward to stimulate the economy today at the expensive of the economy tomorrow.

Therefore, the dollar is not pure fiat, and neither is bitcoin. Bitcoin is the thing that is the money. These perverted definitions of fiat can be used to twist gold into being a fiat currency. They'll argue that only gold backs gold, and hence its value is "unbacked". Total lunacy. Bitcoin backs bitcoin, like gold backs gold. Nothing can back the value of money, even the government. They don't back the purchasing power of the dollar.

When someone says that, "the dollar is backed by the full faith and credit of the US government", I say, "Okay, what does that mean? What are they backing? Are they backing the purchasing power of the dollars?" The truth is they only back the nominal value of the dollar. $1 = $1.

Lance makes an interesting comment that money in your money market fund doesn't just disappear, while bitcoin can just disappear from your coinbase account. Okay, well, coinbase is more like a bank, and dollars disappear and get seized everyday from bank accounts. Dollar bills aren't even safe from civil asset forfeiture.

Explaining Stablecoins

Next, Lance's associate Michael Lebowitz, whom I have interviewed for Fed Watch and is a sharp guy, explains stablecoins in a pretty good summary. However, he ends by saying that the algorithmic stablecoins have crashed for the first time, making the market volatile.

That is not the case, of course. All algorithmic stablecoins have had major issues with their pegs, and most have ceased to function. This particular episode recently with Terra, was such a big deal because it owned a lot of bitcoin and was heavily entwined in the multi-layered scam space.

Conclusion

Lance Roberts concludes that "cryptocurrency" has not delivered on its promises due to a mistaken analysis by crypto bros. He says "crypto" has promised to be like gold, and be money, when it's not.

This is common misdirection, because only bitcoin claims to be digital gold, yet because altcoins fail, bitcoin has not lived up to its promises. Very cringe.