debate

There have been debates about Bitcoin and later cryptocurrencies replacing fiat and gold ever since Bitcoin was created.

The whole idea of rebelling against the banking system and not being under the thumb of governments is appealing.However, to this day the risks of cryptocurrencies replacing gold and fiat have so far surpassed the benefits.

This Monday in New York city, there was a debate hosted by the Soho Forum, a monthly Manhattan debate series. The Debate faced off Peter Schiff against Erik Voorhees. Voorhees, who is the CEO of the exchange service Shapeshift, and took the side of cryptocurrencies.

He claimed that government-backed fiat currencies will be replaced by bitcoin and other blockchain innovations. Over the course of the event he went through the ups and downs of bitcoin and cryptocurrencies in general. He took note of the governments’ ability to instantly ban/censor Bitcoin at will.

He also noted that when it comes to market bubbles, the crypto one will without a doubt be more influenced by the consumers. They alone will decide what kind of currency they want to exchange with. “The biggest obstacle to adoption is most individuals want governments to manage their money for them. Until that changes, cryptocurrencies will play a second fiddle”.

He rounded up by declaring, “One of the biggest strengths of cryptocurrencies is that they are free from the restrictions of traditional financial institutions”.

Bitcoin for example can be used in cross-border transactions, is censorship-resistant and has limited supply. In short, the banks and governments’ worst nightmare.

A debate like this is bound to be heated up

The debate however, was far more than one-sided.

Peter Schiff did provide very compelling arguments and a huge dose of skepticism. He started off by saying that most people are into cryptocurrencies to get rich, not for the long run.

He said people see Bitcoin mainly as a speculative asset and people who want to use it, cannot do so easily.

Later he targeted a specific issue,

“The biggest problem with Bitcoin and why it can never be used as money is because currency has to be a reliable store of value, not just a medium of exchange.” Schiff is no friend of fiat currency either and both experts were able to go on common grounds regarding the subject.

Shiff however, doesn’t believe digital currencies are a major improvement over fiat.

On the subject of cryptocurrencies becoming a store of value, Schiff said that gold’s long tenure in the market will make it very hard to replace.

The audience was given an informal poll before and after the debate. The poll asked if the audience thinks bitcoin had a chance to beat government. The “yay” votes rose from 40 to 55% and the “nay” votes fell to 31 from 40%.

In summary it’s great to see both sides of this argument see clearly that the problem lies with the current fiat and banking system.

The correct decision might not be any of these choices, but something in between or something that hasn’t yet been invented. The good thing is the problem is already identified and in time it will be taken care of.

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