Greg Foss Peter McCormack Peter Schiff

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Podcaster Peter McCormack hosted a debate on September 10, 2021 between gold bug Peter Schiff and bitcoin strategist Greg Foss, discussing the value of bitcoin and gold, economic history, importance market prices, risk management and portfolio allocations. This informative and robust debate arose out of a clash between highly skilled fighters in the investment field. The debate has derailed in areas that have become technical and related to game theory. As mentioned in the debate, the Gold Bugs and Bitcoiners are likely to agree on a lot of economic issues. The clash, however, often comes down to the merits of gold over bitcoin, but also the role of assets in building the portfolio.

The debate began to deteriorate once it was revealed that Peter Schiff was unaware of the Bitcoin network’s difficulty adjustment, nor how it regulates mining activity. Schiff claimed that if the price of bitcoin doubled, the amount of bitcoin mined would increase because miners would spend more energy mining bitcoin. After Peter McCormack informed him of the difficulty adjustment, Schiff wondered what would happen if the price of bitcoin collapsed. Again, Peter Schiff found that adjusting the difficulty would stabilize any drop in hash power and extraction rate.

Shortly after this revelation, he again stumbled upon the supply cap discussion, mistakenly claiming that miners can agree to raise the overall supply cap (discussed here). Additionally, Schiff claimed miners tax bitcoin users, a false claim he has used in other debates and has already been publicly corrected. After his bold proclamations crashed against the wall of reality, the pace of interruptions and ad hominem attacks picked up. Honest debaters engage each other in the pursuit of truth. But instead of acknowledging his flawed comments, Schiff pivoted to attack elsewhere.

The liveliest part of the debate revolved around portfolio construction. As a professional portfolio manager, it was informative, entertaining, and filled with shocking commentary. Greg Foss fired a shot through the arc claiming Peter Schiff was a horrible risk manager based on his record, to which Peter Schiff replied that he “didn’t care”. As a trustee, Schiff has a duty to properly manage risk and could also have countered Foss’ claims if he had a history of risk-adjusted returns. See for yourself on their website.

Often, debates get bogged down because definitions of terms are not predetermined and people intersect. An example would be a commodity which, as defined by Peter Schiff, includes only analogues or raw materials. Bitcoin is rejected by Schiff as a form of money because it is not a commodity. However, the United States Commodity Futures Trading Commission defines Bitcoin as a commodity.

Peter Schiff’s point of view is that a successful cryptocurrency can only be backed by gold or some other asset. He claims this by saying that because these other assets aren’t volatile, don’t move, and don’t depend on someone else’s purchase, which means it’s not a ploy of Ponzi. Peter Schiff fails to mention that gold is highly volatile, prone to declines and bear markets over a decade and more centuries. Between January 1980 and April 2001, gold suffered a drop of almost 66% between its peak and its trough. It took almost 30 years for investors to break even during this secular bear market. In light of the discussion of a physical asset supporting a digital currency, please see the Oracle issue.

At the end of the day, debaters often leave believing they’ve won. In this case, I believe those who are listening to the gold side have won this debate. Why? The Golden Bugs may have finally figured out that Peter Schiff has a serious lack of technical knowledge about the asset he’s so much against!

For those who scored at home, I followed five ad hominem attacks from Peter Schiff, and none for Greg Foss or Peter McCormack. I counted 17 interruptions from Schiff during the speaking time designated by others, but only two interruptions from Greg Foss and five from Peter McCormack. As I noted above, there has been a noticeable change in demeanor and respect after Peter Schiff’s multiple technical errors.

My proof of work is linked here, with detailed notes and summaries on the exchanges.

This is a guest article by Bitcoin & Bald. The opinions expressed are entirely theirs and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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