Bitcoin vs Gold & Silver

Adam Taggart
By Adam Taggart on Sat, May 25, 2013 - 11:26am

Here's a video discussion that was recorded between Chris and Mike Maloney when we were down in Los Angeles last month:

The big deal over Bitcoin is our freedom of choice, because if digital options such as Bitcoin or U.S. dollars were equal in value as money to gold and silver, the owners of the systems wouldn’t need laws to enforce a currency monopoly. Mike has already taken sides in this controversy, saying, “I’m for whatever the free market picks for currency.”

Dr. Martenson agreed, wisely pointing out the ongoing “Cold War race between security professionals and hackers.”

On money, Mike says “I really hope the public learns enough that they refuse a gold standard, and demand gold and silver”—in other words use real gold and silver as mediums of exchange.

Mike continues:

“…instead of a national currency that supposedly represents gold and silver, that they’re keeping safe in the vault for you, and they’re allowing you to trade these claim checks on gold and silver

…which give them the ability to put capital controls in place so they can control, and tax, and monitor shifts of wealth … and basically infringe on our privacy and limit our freedom.”

Here is what Nobelist, Friedrich Hayek, had to say about this in his 1944 classic, The Road to Serfdom (cartoonoriginal):

Nothing would at first seem to affect private life less than a state control of the dealings in foreign exchange, and most people will regard its introduction with complete indifference

Yet the experience of most Continental countries has taught thoughtful people to regard this step as the decisive advance on the path to totalitarianism and the suppression of individual liberty. It is, in fact, the complete delivery of the individual to the tyranny of the state, the final suppression of all means of escape—not merely for the rich but for everybody.

Mike reminds us that it is dangerous to swim near a drowning man, and as these legacy economies drown in debt, they’ll be grabbing anything they can to stay afloat.

The recent shutdown of the U.S. bank account operated by Bitcoin’s most popular exchange, Mt. Gox, shows us that exchanging currency without registering with the U.S. Treasury is simply not an option. 

Mike wonders how converting energy to Bitcoin purchasing power is equivalent to energy embodied in mined and minted precious metals, as it produces nothing tangible. Chris points out that “Bitcoins have value if and only if the Internet is there for you, period.” 

“The system being up and running is your central bank in this case,” Dr. Martenson continues.

“The reason I prefer gold is that it’s the only money I can actually hold which is not simultaneously somebody else’s liability. 

Bitcoin is still somebody’s liability; there is a server farm out there that has to maintain its integrity, has to stay up and running, for your Bitcoins to have any value at all.”

For more introduction to Bitcoin, a beginner video, and our most recent article, can be found here.

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Ejh237's picture
Status: Member (Offline)
Joined: Oct 16 2011
Posts: 13
It is (Bitcoin and PMs) vs. FIAT

I'd like to see Chris and Mike consider their words with regard to Bitcoin a bit better. (no pun actually intended). Please excuse my words, as I am not a big writer, but I thought this was an important thing to post on.

Like the price of gold/silver stands agains the dollar (even minipulated to try to make the doller look...  less bad?) Bitcoin stands against the dollar (and the euro, etc.) I believe it did a better job of showing (via price signals) what has gone on in the FIAT world the last 6 months than gold, or...  even the Dow.  ;-)  Even if Bitcoin did include a little bubble, or over exuberance, or whatever it was, recently. Honestly, when it started going parabolic a few months back, I felt like Bitcoin was actually agreeing with how I felt, seeing what was going on around the world.

While, I wouldn't invest in BitCoin at this time ($120-ish each), I do feel like we ARE on the same side, and should respect Bitcoin as help, not as something to be thrashed at. Mike is so terribly wrong when he likens creating a Bitcoin to creating FIAT currency units out of thin air. He is so wrong there, it's hard to take him seriously as having any knowledge on the topic. The reason it takes "work" (read as hardware, internet, but mostly electricity), is to give the creators (miners) skin in the game. Watch an episode of "Gold Rush" (No, really, you should...  at least so you can understand mining insanity a bit more). The struggle is: Cost to extract at current value. In that regard Bitcoin and Metal have quite a bit in common!  No one can just log into the Bitcoin world and say "Please add 85 billion BTC". Even if it is fake work, it is important work! It's exactly the opposite of what central banks do. To discount another anti central banking based attempt at a solution doesn't feel right.

Yes, from an "internet is gone" point of view, Bitcoins are worthless. But, what else isn't worthless at that point? Isn't that why we are here? I have been a subscriber to Chris for long enough that I'm well on the track of being resilient for that possibility.

Oh, my Bitcoin involvement?  I currently own 3.08277843BTC (yes, 3 and change). I've mined them all, a tiny of a fraction of a Bitcoin at a time. I set my computer up to mine the things in the background a few years ago (when they had a little bubble from $10 to $30 to $10 back in June 2011)...  Originally, I was mining about 0.10BTC a day...  I turned it off, as it wasn't worth my time, and I could feel the draw on my computer while I was using it. Just like real miners...  at $120 each, I've turned my miner back on (The cool thing is that Mac operating system, or the mining software, is doing a better job of my not noticing the miner running in the background.)  I'm getting about 0.01BTC every few days...  But, mining as been optimized, computers have gotten faster, new Bitcoin miners have got amazingly faster, so now it is requiring more work to mine (We've passed peak Bitcoin). I'm sure it's taking a bit more energy, running it on my machine, but, I think it's minor, and I don't care.  I did consider sticking some FIAT dollars into Bitcoin a few years ago (like I've done with some of the Jr. PM miners), but I didn't. I decided to just mine some myself...  Wish I had bought some now...  Again, that corollary is amazingly similar to a Jr. minor. Except, my Jr PM stocks are off about 50%...  and the Bitcoins are up 1,200%.

Best of luck to all of you!

Stack & Prepare,


Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
Excellent post Eric

You said,

Mike is so terribly wrong when he likens creating a Bitcoin to creating FIAT currency units out of thin air. He is so wrong there, it's hard to take him seriously as having any knowledge on the topic

I tend to use the same criteria to guage whether someone has any idea what Bitcoin is.  It is in fact anti-Fiat.  Fiat currency us used because you must.. the Governments that create their fiat force you to use it as you must pay taxes in it... under threat of violence.  Bitcoin is a free choice, and a dramatic success thus far in terms of adoption, as evidenced by it's (generally) rising price.  Glad to see someone who has actually mined Bitcoin posting... please join the Bitcoin interest Group.  I too view it as an important, relatively unmanipulated signalling mechanism.  I own zero BTC   : (

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