illicit activity – bitcoin. The virtual, decentralized, private currency has been gaining in value since its inception five years ago, and recent trading in the currency has been exceptionally volatile.
One man who knows a thing or two about hedging against the dollar (and still believes in the greenback’s collapse) is Peter Schiff of Euro Pacific Capital. The long-time gold bull and frequent Federal Reserve critic is intrigued by the possibilities offered by the virtual currency, but isn’t buying it.
“I have a lot of sympathy for what people are trying to achieve with bitcoin, it’s just not going to work,” he says in the attached video. “People think that because bitcoin replicates all these properties that gold has therefore it can work as a modern day gold standard, but it doesn’t have any value on its own."
In Schiff's mind, it's gold's implicit value that separates it from currencies like bitcoin. "Gold had value before it became money, and that what’s makes it good as money," he notes, since "there is a valuable commodity underlying its monetary purpose.”
Despite skepticism from strategists like Schiff and Wall Street in general, Bitcoin has many prominent investors, including Sir Richard Branson, Marc Andreessen, and the Winklevoss twins. In addition to owning bitcoins outright, investors in the digital currency phenomenon have stakes in bitcoin "wallets" like Coinbase, and various other technology companies that construct bitcoin “miners,” for example. These backers and others are betting bitcoin goes mainstream in a big way.
Not surprisingly, Schiff’s alternative for the bitcoin bugs is to get into gold. “I think the world is going to return to real money, which is gold, and we might have paper currencies backed by gold, we may have digital currencies backed by gold, but what will give it value is the gold backing.
“The bitcoin community has that right, we need an alternative to irredeemable fiat currency that the Fed could create at will in unlimited quantities, but unfortunately bitcoin isn’t it,” he concludes.
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