Watch: Blockchain-based gold reserve currency ‘is the future’, claims Peter Schiff | The Crypto Mile
A gold-backed cryptocurrency that utilises blockchain technology would make the precious metal a “better monetary instrument than it was in the past”, claims Peter Schiff.
The renowned gold-bug derided bitcoin as a Ponzi scheme and added that “it will have a hard time even making a new high, and if it does make a new high, even getting to $100,000 is going to be a stretch, which only equates to four times your money”. But, he upheld the inherent value of gold, noting that it is the least reactive precious metal, and that “it doesn’t lose its properties over time”.
‘Gold-backed crypto’
Schiff is often misunderstood as a critic of blockchain and digital currencies, but he clarified his stance on this week’s episode of Yahoo Finance’s The Crypto Mile. He argued for blockchain technology to be combined with the inherent value of gold to make the precious metal a “better monetary instrument than it was in the past”.
“We don’t have to ignore blockchain technology, we can use it to improve the divisibility and the portability of gold and make it an even better monetary instrument, than it was in the past,” he added.
Schiff argues that gold should be reintroduction as the world’s primary monetary reserve, but updated and renewed by blockchain technology. “With the internet, with blockchain, there is a major improvement in the functionality of gold to act as a medium of exchange and as a unit of account,” Schiff explained.
He differentiated between the speculative nature of bitcoin (BTC-USD) and the inherent value of blockchain, promoting the idea of a gold-backed digital currency as a potential solution to the looming financial turmoil.
Schiff, who recently spoke at the London Blockchain Conference, described the world as “on the verge of a monetary upheaval”, and that the US dollar has been devoid of concrete value since the abandonment of the gold standard in 1971.
“Gold was the legitimate currency which we had at one point, but fiat currency is backed by nothing. Bitcoin is also backed by nothing, and it is kind of like a fiat cryptocurrency. But if you have a cryptocurrency that is backed by something of value, such as gold, then you have something legitimate that I think could work. I think that is the future,” he added.
‘Bitcoin is a Ponzi scheme’
Schiff believes that bitcoin, despite its revolutionary role in showcasing the capabilities of blockchain technology, is fundamentally flawed. He asserted that the cryptocurrency lacks inherent value and operates much like a Ponzi scheme, where the demand for bitcoin relies on the premise of selling it to another party at a higher price.
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“The demand for bitcoin is based on the belief that you can sell it to somebody else at a higher price, and the only reason that the other person is willing to pay a higher price is because he believes that he can sell it to someone for an even higher price,” he argued.
Contrarily, he pointed out the intrinsic value of gold as an industrial asset, highlighting the sustained demand for gold due to its various real-world applications.
A Word of Caution to Bitcoin Whales
Continuing his critique of bitcoin, Schiff offered advice to those who have made substantial investments in the cryptocurrency over the years, encouraging them to consider other assets.
“A lot of people that got into bitcoin years ago need to take some chips off the table. You can’t be overly exposed to bitcoin,” Schiff remarked. In his view, there are other speculative assets with more potential for returns and less risk compared to bitcoin.
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Expressing his preference, Schiff said, “I think there are other speculate assets that I’d rather gamble on, like gold mining stocks, where I think you could make 50 or 100 times your money, which is what people think that they can make with bitcoin, but I doubt it.”
Schiff shared his scepticism about the likelihood of bitcoin reaching a new peak, let alone hitting $100,000, which he said would merely equate to quadrupling of one’s investment.
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