Will Bitcoin Demonetize Gold?

Monetary Metals CEO Keith Weiner defends the future of gold against bitcoin podcaster Pierre Rochard.

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Will Bitcoin Demonetize Gold?

Will gold remain an important form of money, or are cryptocurrencies like bitcoin set to overtake it? 

That was the subject of a Soho Forum debate held on July 26 at the Mises Institute in Auburn, Alabama, as part of Mises University, an annual instructional program in the Austrian school of economics attended by over 80 accepted students from around the country.

Keith Weiner, CEO of Monetary Metals, defended the resolution: "Gold will remain an important form of money in the 21st century." Weiner took the position that gold is poised to hold on to the monetary status it's enjoyed for the past 5,000 years and that its recent performance only confirms why.

Pierre Rochard, co-host of the Bitcoin for Advisors podcast, took the negative, arguing that the technological advantages of bitcoin will make it the preferred medium of exchange in a post-dollar world.

This debate was moderated by Soho Forum director Gene Epstein.

Narrated by Nick Gillespie; edited by Clay Barnett and John Osterhoudt

Comments

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[CE]

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[marblle exporter]

hope good luck

[Bubba Jones]

lulz

[Union of Concerned Socks]

^ This.

[Works45]

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[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

I've just finished reading "Good Money" by George Selgin from 10-15 years ago, about the period roughly 1787-1818 where the Royal Mint refused to mint new copper pennies, half pennies, and farthings which most workers needed (they earned 10 shillings / 120 pence a week) not just for pay, but to buy food etc. Full of fascinating details on coinage itself, although a bit disorganized, dates too often skip the year, and assumes you know a lot of terms (hubbing? rotative steam engine? wtf)

Its relevance to this is its side stories on precious metals, bi- and tri-metalism, counterfeiting, incompetent bureaucrats, and cronyism. There are probably other books with a lot more detail on these specific subjects, but if you only want a general introduction in a very readable and fun book, I do recommend "Good Money".

[Longtobefree]

Which will remain feasible when we are forced to rely on "renewable" energy alone?
Show me a handful of bitcoin when there is no electricity and I will talk about it. Until then, I prefer food and ammunition as a wealth store.

[BYODB]

This is retarded, and the answer is 'no' because bitcoin might as well be a petrodollar given that it can't exist without electricity.

And besides that, gold was already 'demonetized' ages ago here in the U.S. now it's pretty much a commodity.

Lastly, try and put a diamond in a bitcoin setting and give it to a loved one and see how they like it.

I get it bro, you like to invest in worthless garbage that's hot at the moment but let us not pretend that cryptocurrency is anything other than an idiotic fad that burns very real resources in exchange for purely imaginary ones. It's literally a negative value to any sane human but fortunately for you there aren't a lot of those left it seems.

[the machine stops]

Amen

[Works45]

Hello

[NOYB2]

I get it bro, you like to invest in worthless garbage that's hot at the moment but let us not pretend that cryptocurrency is anything other than an idiotic fad that burns very real resources in exchange for purely imaginary ones.

Cryptocurrency is a transaction processor, like banks, credit cards, SWIFT, etc. They all "burn very real resources".

It's literally a negative value to any sane human but fortunately for you there aren't a lot of those left it seems.

Yeah, "sane humans" like you rather pay 3.5% for every transaction to some gigantic, politically connected, government-granted, privacy-invading monopoly! It's what "sane humans" like you do!

[Diane Reynolds (Paul.)]

No.

[mad.casual]

Yeah. I'm confused as to how it's a question. Will coinage demonetize gold? Will cash/checks demonetize coinage? Will credit demonetize gold, coins, or cash/checks? Will bitcoin demonetize gold, coinage, cash/checks, or credit?

I don't think you understand how any of this works.

[Mickey Rat]

Bitcoin is dependent on electronics working. Just for that reason, tangible mediums of exchange will still be desirable in some form.

[Granite]

Why would that matter? Your scenario requires a life irrevocably lived in the Stone Age - that’s more far fetched than a money system that so many criminals are reliant on. And by criminal, we just mean “someone who doesn’t play by your rules” which, let’s face it, include trying to tax something that was created to subvert your taxes.

[Agammamon]

Except that crypto-currency *does play by your rules* - its not truly anonymous and they're all (yes, even the 'decentalized' ones) are vulnerable to control by people who control the majority of the hardware on the verification networks.

Hence why Etherium is still 'proof-of-work' instead of transitioning to 'proof-of-stake' - the current big names among the verification nodes have invested a lot of money in hardware for PoW and don't want to risk losing their place in a transition to PoS.

[NOYB2]

Except that crypto-currency *does play by your rules* - its not truly anonymous

Cryptocurrencies can be truly anonymous, even if Bitcoin isn't by default.

and they're all (yes, even the 'decentalized' ones) are vulnerable to control by people who control the majority of the hardware on the verification networks.

Nobody controls "the majority of the hardware". And as you just pointed out yourself, there are many alternatives possible.

Hence why Etherium is still 'proof-of-work' instead of transitioning to 'proof-of-stake'

So? People currently use Ethereum because they find it useful and trust it sufficiently. If that changes, they can change to something else.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

I appreciate the concept of crypto currency, especially truly anonymous versions, but I see no reason to use a currency the government can snoop on, or where a corrupted crypto key can lose your entire account.

Precious metal currency has problems I listed above, but they are all solvable with ordinary solutions, and its stability is far better than government fiat money. Google for "inflation 1800 to present" and you will find the inflation curve was wiggly but flat until WW I, little wiggles up and down which had no long term affect. The only except was inflation during wars and deflation back to the pre-war norm after wars ended.

Where things went bad was the 1913 Fed. The couldn't stop inflation during the war, didn't want to, but they did try to stop post-war deflation, did a half-assed job of that, and Woodrow Wilson's stroke stopped any further experimentation, so the 1919-1920 recession was over and done with in 18 months. Then Hoover and FDR prolonged the Great Depression, which was replaced by the continual and unsteady inflation ever since. Fiat money and the Fed have done nobody any favors except politicians and cronies. I'd take a return to precious metals any day.

[the machine stops]

Without having yet listened, and I'm no economist, but I'd like to point out that crypto valuation is represented by fiat currency (ie, bitcoin is worth $23000). I don't see how something that is valuated with a fiat currency could somehow ever replace that fiat currency.... and i understand that scarcity exists in Bitcoin but it's an arbitrary and artificial form of scarcity. If Bitcoin's price has collapsed due to contagion or exposure to everything else going on in crypto, how does that make it any sort of inflationary hedge? The entire point of gold is that : gold is extremely useful, gold is naturally scarce, and gold prices are relatively really stable... let me know when you can make physically real and useful products (like circuit boards) using a refined Bitcoin....

blockchain technology? Useful. Bitcoin? Useless as an investment asset unless you're trying to get rich quick which, clearly, only the people who got in early are maximally profiting essentially from a downline (which sounds alot like a ponzi scheme, no matter how you spin it). Or Bitcoin is also useful if you're trying to buy drugs or illegal porn on the darkweb or for laundering money through mixing services...

The crypto "industry" is rife with fraud in a way that, while possible in metals exchanges, does not exist at this magnitude with gold trading.

And finally, bitcoin will never become useful as a currency until it becomes widely adopted and trusted by consumers AND retailers.. until then, it's simply just an "asset" that is valuated by a fiat currency.

The more i learn about crypto, the less i trust it and the less i trust anyone who promotes it. And I'm NOT some sort of hedge fund guy or economist, i didnt even go to college...

But, frankly, the entire concept of NFTs as well as the collapse of stablecoins as well as all the self dealing that caused exposure to Three Arrows is a black eye to crypto confidence. If cryptobros cannot get people like ME, a lowly landscaping professional, to have enough confidence in crypto to accept payment in bitcoin, then how on earth do you expect it to replace gold, much less fiat currency?

Billionaires like cuban, thiel, and musk talk up crypto for a REASON. They're the whales. They want the price to go up. Durrrrrrr

[Diane Reynolds (Paul.)]

I don't see how something that is valuated with a fiat currency could somehow ever replace that fiat currency....

I am not a fan of crypto-- or perhaps better stated, a crypto-skeptic. But this is... probably not a long term issue... if... IF crypto were to not only survive but supplant fiat currency as the preferred method of exchange (which I contend it will never do).

We value crypto in fiat in relation to fiat currency because that's the collective way in which we see and can measure value at this time. But if you could say, magically move the clock forward to some kind of future time where bitcoin was the predominant method of exchange, the valuation of crypto would be measured the same way we value the dollar: by what it can purchase.

If on Monday, 500 crypto-coins could buy a BMW 6 Series, but on Wednesday, 500 crypto-coins can only buy a BM2W 3 series, then you have a sense of the value of crypto.

[the machine stops]

Indeed. Which is sort of my point at the end. If someone offered me $40 in dogecoin to mow their yard, i would laugh in their face.

[mad.casual]

I don't see how something that is valuated with a fiat currency could somehow ever replace that fiat currency...

The more I think about it, the more it seems abjectly socialist/authoritarian. It's the same line of thinking that, if we just pimp green energy hard enough, fossil fuels will go away forever. Instead of recognizing that, if we convert the world's fleet to 99% electric, we've effectively extended the lifespan of the remaining fossil fuel applications another century.

Kinda the inverse of Paul's point above. Fiat currency was so evil when it was Bush and Blackrock funneling money through Iraq. Now that Biden's funneling money through a war everyone approves of and Elon Musk is evil for supporting free speech, no one gives a shit about fiat currency. If Bitcoin takes up 50% or 90% or 95% of daily transactions, (setting aside the fact that we're still going to get taxed) who gives a shit about fiat? My annual shaving purchases subsidize the war on terror? All $25 of it?!?!

[the machine stops]

Yea. But i still trust my fiat currency more than i trust Peter Thiel's crypto pumping

[mad.casual]

Right. The "50% or 90% or 95%" was representative of the whimsical nature of the trust value. Bitcoin existing only as a white paper (or less) is sufficient for probably people to trust fiat currency.

[mad.casual]

Probably *most* people that is.

[NOYB2]

I don't see how something that is valuated with a fiat currency could somehow ever replace that fiat currency.

Cryptocurrencies aren't "valued with a fiat currency", they simply have exchange rates to fiat currencies.

If cryptobros cannot get people like ME, a lowly landscaping professional, to have enough confidence in crypto to accept payment in bitcoin, then how on earth do you expect it to replace gold, much less fiat currency?

If I send you a crypto payment, you can verify within minutes that you have received it and you pay no transaction fees. You can immediately convert the cryptocurrency to some other form if you are worried about price fluctuations.

That's a lot better than a credit card transaction, where your customer can not only cancel the transaction by calling the credit card company, but also hurt your ability to transact in the future.

Billionaires like cuban, thiel, and musk talk up crypto for a REASON. They're the whales. They want the price to go up. Durrrrrrr

So what? You don't have to invest in cryptocurrencies in order to use it for transactions. I mean, you don't invest in Visa or Mastercard in order to accept credit card transactions.

[Unicorn Abattoir]

Gold works without electricity.

[the machine stops]

Heck, gold is necessary for the electronics that run the crypto exchanges and blockchains too

[Diane Reynolds (Paul.)]

I'm told crypto exchanges are not necessary to transact in crypto... yet everyone seems to need exchanges to transact in crypto. It's... confusing.

[BYODB]

And even with those, I still can't buy groceries with crypto so is it actually money or (like gold) is it a commodity that a few random places will allow as a transaction medium?

It's like buying food with your stock portfolio, it's absurd.

Nobody buys crypto to purchase actual goods, they buy it to resell to another sucker later on.

[the machine stops]

this ^^

[NOYB2]

And even with those, I still can't buy groceries with crypto so is it actually money or (like gold) is it a commodity that a few random places will allow as a transaction medium?

That's not an inherent problem with crypto, that's a consequence of US tax law and regulations: those laws treat crypto more like an investment, with all the overhead that entails, so that's why it is mostly used that way.

Nobody buys crypto to purchase actual goods, they buy it to resell to another sucker later on.

Actually, people right now mostly use crypto to transfer larger amounts of money cheaply, both internationally and domestically.

[NOYB2]

You don't need crypto exchanges to transact in crypto; there are plenty of apps for your phone and for your desktop that allow you to transact directly, with no exchange involved. From a user's point of view, direct transactions and transactions through crypto exchanges look pretty much the same.

[NOYB2]

Gold works without electricity.

How do you know that the gold coin you are taking hasn't been debased? Are you going to run around with thousands of dollars worth of gold in your pocket, or are you going to deposit it somewhere and exchange deposit slips? How do you know your bank isn't raiding those deposits, like they historically do?

In order to have a gold-based payment system, you either need tools for physical validation of gold coins (e.g., XRF), or you need an infrastructure for certifying and validating coins. On top of that, you need secure storage and transport. An actual gold-based payment system is complex, requires a lot of infrastructure, and far harder to verify and validate than crypto.

Of course, gold can be a useful hedge against inflation and political upheaval, but as a currency or medium of exchange, it has a lot of overhead and complexity.

[Winston in Wonderland]

Reason's obsession with the Ponzi Scheme is difficult to understand.

[the machine stops]

I agree. It's a little bit annoying. But at least Reason isnt descending into outright, blatant crypto marketing

[But SkyNet is a Private Company]

Watch The Anarchists on HBO. Libertine idiots are all pretty much alike

[the machine stops]

Another thing that bothers me about crypto : If it's a mode of exchange, then why do I literally need to have a electronic device to use it? I would literally need to set up some sort of "wallet" to even use it? I would literally need to purchase crypto from someone (or an exchange), either with fiat currency or by providing a service, but then i need to take all these extra steps in order to reconvert it back into fiat currency? Cryptocurrency is NOT a currency.

The entire point of currency is to facilitate trade... Let's say i have fish but i need corn. Joe needs corn but he has tomatoes. Bob has fish but he needs tomatoes. Rather than a confusing, convoluted bartering agreement, we just use the currency.

Cryptocurrency necessarily makes that entire process unnecessarily more complex than just handing someone a dead president.

[JFree]

The entire point of currency is to facilitate trade... Let's say i have fish but i need corn. Joe needs corn but he has tomatoes. Bob has fish but he needs tomatoes. Rather than a confusing, convoluted bartering agreement, we just use the currency.

The origin of money/currency was never barter replacement. The historic origin of currency (and for that matter writing and weights/measures) - in every ancient location I am aware of - was to enable lending. Specifically, a way for an agricultural society to borrow what it needed now - and record those transactions - until the harvest came in later - and debts could be settled both internally and with nearby ag areas.

[NOYB2]

Another thing that bothers me about crypto : If it's a mode of exchange, then why do I literally need to have a electronic device to use it?

All forms of currency need some mechanism to make sure that the tokens you are exchanging are limited in number and that ownership is transferred reliably. That's not an easy problem.

When you "hand someone a dead president", there are lots of built-in security features and serial numbers to try to ensure that. You must verify those security features. Furthermore, you must take steps to protect the cash you are carrying against theft; not only can criminals take your cash, even government can.

When you transact in gold coins directly, both parties to the transaction need to be able to verify that the coins haven't been debased and have the gold content they claim they have. And you still face the problem of theft. Again, hard problems.

With a small piece of software running on your phone, cryptocurrencies provide pretty good solutions to all those problems. Crytocurrencies can be gold backed or they can simply be tokens; either way, they have a lot of advantages over both paper currency and gold coins. They are actually less complex than either.

The reason cryptocurrencies are not used in day-to-day transactions in the US is because the US government has been fighting this for more than a decade. Without US government interference, you can bet Google, Apple, PayPal, Square, and thousands of other companies would have deeply integrated cryptocurrencies into their software and you could use it to pay for everything.

[the machine stops]

And also. If crypto isnt a pump-n-dump scheme (at best) or a new breed of ponzi scheme (at worst), then why is there a cottage industry of social media influencers talking about "buying the dip" and literally begging people to "invest"? It is absolutely NOT the same as some fella making an income by talking about money or by suggesting which stocks to buy or avoid (as long as they're not insider trading)... it's really not.

If crypto was inherently useful, then why when i log into play online spades, i see people trying to pump doge? It's because they bought a bunch of dogecoin and are now trying to create grassroots popularity for it, so they can sell it later for profit. That sort of shit is illegal with stocks for a reason.

[SRG]

If crypto isnt a pump-n-dump scheme
If my aunt...

[Mickey Rat]

No.

Next question.

[the machine stops]

????

[the machine stops]

Lol failed laughing smiley.

[SRG]

"Crypto, through the tulips"

e-tulips is what they are.

[Agammamon]

Does KMW know *nothing* about cryptocurrency and this is why she keeps allowing these stories about it?

There is a massive difference between what crypto-proponents, pushers, 'entrepreneurs', etc *SAY* crypto can do and what they're actually doing with it. Mostly they're not even working on the things they say they're working on - they're spending a lot of *useful* money to garner massive collections of *useless* 'money' to perpetuate scams, rug-pulls, pump-and-dump - you name a currency scam and these people are doing it.

Hell, all the talk about 'decentralization', anonymity, etc are all lies. Especially once the corporations decide to grab a stake. You think banks are bad - imagine what swears its not a bank and utterly unaccountable has control of not just a number that represents your money, but your actual money.

[CE]

Gold will still be valuable in 10,000 years.
Bitcoin will be lucky to make it another 10.

[NOYB2]

Gold will indeed still be valuable in 10,000 years.
The US Dollar, VISA, MasterCard, and AmericanExpress will be lucky to make it another 10.

Bitcoin has no intrinsic value; its value is in being able to settle financial transactions securely and with little overhead.

[But SkyNet is a Private Company]

hahahahahahaha

BWAHAHAHAHAHAHAHAHA

[Vikas]

Nothing can replace gold in a country like India. Infinite Broker

[Hamza]

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[ArnoldTaylor]

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[liamjonh225]

Is KMW permitting these pieces on cryptocurrencies because she has *nothing* to say about it? What cryptocurrency proponents, pushers, "entrepreneurs," etc. *SAY* crypto can do what they're doing with it differ significantly. Most of the time, they aren't even working on the projects they claim to be; instead, they are spending a lot of *sound* money to amass vast sums of *useless*'money' to continue frauds, rug-pulls, pump-and-dump schemes, and every other type of currency scam you can think of. All of the claims are made on "decentralization," "anonymity," etc., especially after the businesses decide to buy a stake. Read More: medical billing and coding services