Understanding Bitcoin, Gold, and Monetary Anchors

Published on
October 16th, 2019
Duration
25 minutes

Understanding Bitcoin, Gold, and Monetary Anchors

The Expert View ·
Featuring Robert Breedlove

Published on: October 16th, 2019 • Duration: 25 minutes

Robert Breedlove, CEO and CIO of Parallax, joins Real Vision to explain the difference between hard money and soft money. He uses the history of money and global monetary systems to argue that bitcoin is the “hardest” form of money in existence. Breedlove argues that, because bitcoin has solved the classic “divisibility problem” presented by gold, it will eventually replace gold as the anchor of a new monetary system. Filmed on September 24, 2019 in New York.

Comments

Transcript

  • mj
    miztaken j.
    20 October 2019 @ 21:19
    In addition to or instead of creating chockpoint on exchanges what if government (or government of different countries) tries to come up with their own digital coin that they push on their citizen. What happens to bitcoin?
    • JO
      Johnny O.
      21 October 2019 @ 09:48
      Part of the motivation to crypto is that governments (and Facebooks) are untrustworthy. Consistent with that, their proposed digital currencies are never properly decentralised networks but are controlled by a central issuer.
  • BT
    Brian T.
    20 October 2019 @ 14:58
    Brilliant! Bob, My two cents is that you may have well widened my understanding of monetary economics especially with the 5 functions cited.
  • MJ
    Mark J.
    19 October 2019 @ 14:59
    The topic not addressed and the real problem with Bitcoin is the uncontrollable supply of other cryptocurrencies. He argues that Bitcoin’s carefully controlled supply creates scarcity value which in turn is what makes it valuable. True - in a vacuum, but it’s like saying a stock is valuable simply because it was the first one to widely trade on a stock exchange, ignoring the fact that thousands of other stocks will soon be trading as well. Bitcoin has the best brand name for the moment and many around the world have no better alternative to get money out of their local depreciating currencies, so it is maintaining value for now. Over the long horizon, Bitcoin will have ever increasing competition from all types of digital currencies, which will massively increase the supply of digital currencies available to anyone wishing to get their assets out of fiat currencies. Bitcoin will undoubtedly is subject to technological innovation which will likely result in new superior digital currencies with respect to transaction costs, processing speed and security. How would you value gold in a scenario where the process to manufacture synthetic gold was perfected, the end product indistinguishable from actual gold and hundreds of factories were being built around the world?
    • SS
      Steve S.
      20 October 2019 @ 04:16
      Bitcoin is a open source protocol. Its a layer of the internet that can be updated and built upon. So the arguments of technology do not matter the way you are thinking of. Thats why Microsoft is building identity solutions to be on the bitcoin blockchain. Other cryptos cant compare bc bitcoin is the most secure network on earth. It is stronger than the top 500 super computers by at least 100,000 and that info is years old. Speed is not as important as you think. Even though bitcoin is not slow. Sending other forms of value across the world is slower. Nevertheless it can get faster. But security is by far the most important aspect of transacting value. Speed is irrelevant if its not as secure. Now think of how basic the internet was in the 90s..those same protocols are what the current web operates on. Bitcoin will have many layers and applications added to it. The free market has selected bitcoin organically. This is where all the talent is working. These other crypto’s dont have the developers or network effects to compete on any level. That would have to happen organically. Email is an example of a protocol thats clunky as hell but its entrenched in the system. Sure we could update it. Have it show us read time stamps and emojis and a new interface to look slick but we do not and never will. Protocol history vs first movers as a business are way different. Protocols do not get replaced
    • OM
      Oliver M.
      22 October 2019 @ 18:45
      So how many shiny metals have ultimately managed to compete with gold?
  • RS
    R S.
    19 October 2019 @ 05:00
    He's excited about bitcoin achieving $2 trillion of transactions in 10 years. DTCC (a corporation) clears $47 quadrillion, every year. Bitcoin isn't the hardest money ever, that would be LEO, or DCR, or ETC, or any of the hundreds of other cryptocurrencies with lower inflation rates and which claim the exact same features of bitcoin or better, and there will be endless others... Zero scarcity, unlimited cryptocurrencies.
    • jm
      joseph m.
      21 October 2019 @ 18:29
      Ethereum cannot be rolled in as hard money in the least... Vitalik held a pre-mining sale and scooped half of it for himself making him rich. The even bigger point is that Ethereum still has no cap on how many coins will be generated, ie. inflation. LEO and DCR I don't know much about but they sure smell like shitcoins. LEO looks like everyone is trying to dump their bags too...
    • RS
      R S.
      22 October 2019 @ 08:37
      Wildly worthless, all of them, as stores of value. Cool technology.
  • JM
    John M.
    18 October 2019 @ 17:19
    Great presentation. Could someone comment on whether governments (i.e., a coordinated group of governments) could shut down bitcoin miners or bitcoin exchanges ? Is this another chokepoint of the bitcoin system?
    • JA
      Jernej A.
      18 October 2019 @ 18:34
      Yes, exchanges can be shut down and a large chunk of miners could be shut down too. Its a question though on whether you believe that governments can actually act together and coordinate such operation. Also to add is that you decentralized exchanges (Bisq specifically) that would allow you to buy/sell bitcoin without going through exchanges. So a far more inconvenient event would be if banks start shutting down transactions related to the purpose of buying bitcoin.
  • PJ
    Peter J.
    18 October 2019 @ 11:43
    When going through the key attributes of money, Robert missed the most important from his list IMO, that is Trust / Confidence. Without this it is surely worthless. Gold has built a high level of confidence and trust over thousands of years. Bitcoin has a way to go in this department, so I expect it may take a lot longer to gain general acceptance and use than those who are actively steeped in its development and who see its great potential. Only time will tell.
  • PG
    Paul G.
    18 October 2019 @ 04:43
    Will be really interesting to come back to these Gold BTC debates and see how they age in say 10 20 30 years. ...
    • AW
      Adam W.
      20 October 2019 @ 17:14
      Absolutely, Bitcoin is 10 years old, gold is 6000.
  • jT
    jonathan T.
    17 October 2019 @ 16:10
    Gold lived a 10 years (not exactly sure) bear market where is value in term of money was near 0. the only things that gives it value during this times was all its other purposes. The only purpose of Bitcoin is being money. What will happen when it will face a bear market as strong as gold juste lived? I think it will collapse.
  • MC
    Minum C.
    17 October 2019 @ 14:44
    The rebuttals against bitcoin from Roy Sebag make the most sense to me. I dug up some old notes from that interview. Bitcoin is a human made system that requires humans to cooperate towards the goal of building it. Gold doesn't need anything other than the laws of nature to exist. Bitcoin is not mined into existence. It is powered into existence, using massive amounts of electricity generated from basic commodity inputs. Hence bitcoin is definitely not hard money as it is a derivative of commodity inputs and human ingenuity. Gold's blockchain is the law of physics. It is a meritocratic store of value.
    • JH
      Jason H.
      18 October 2019 @ 03:46
      When all the coins are mined, given that it is being used more as a store of wealth than a transactable currency, what is going to keep the block chain going? Currently is is run mostly by mining activity, when all the mining is done it must run on transaction activity. No?
    • PD
      Paul D.
      19 October 2019 @ 04:57
      Gold needs to be mined as well and this also requires human effort. I don’t see a large difference?
  • PD
    Pat D.
    17 October 2019 @ 04:03
    Amazing delivery of content - unemotional, thoughtful, and thought-provoking. I was sceptical about Bitcoin till this piece ....... and I have done my share of due diligence. Thanks, Robert, and the team at RV.
    • BK
      Brian K.
      17 October 2019 @ 05:14
      I would add naive and childlike. His presentation only reinforced my skepticism of Bitcoin. But if you are looking for confirmation bias, this is a great video.
    • Bv
      Berend v.
      17 October 2019 @ 13:44
      @Brian what in particular would you say, is making you a skeptic?
    • BK
      Brian K.
      18 October 2019 @ 02:03
      Berend v. This idea that Bitcoin can thumb its nose at government intervention and controls. No government, especially one like ours, will ever give up control of money. Trump can issue an Executive Order at anytime stating a threat to national security and put an end to Bitcoin. EO 6102 is a perfect example. Plus, as a currency/payment system, Bitcoin is a failure.
    • JM
      John M.
      18 October 2019 @ 17:12
      I don't see government giving up control of money unless it chooses to shrink its role in society. Control of Money & Army are critical. At some point Bitcoin is a national security threat.
    • PS
      Price S.
      18 October 2019 @ 20:06
      John M. We are the government. The “government won’t allow it” arguments are weak. You grown American men should be ashamed... for somewhere in your lineage not too many generations past, one of your ancestors (the reason for your being here) would have the mind to slap you for taking such a sheepish position. If we the people want it then we the people shall have it, simple as that.
  • BK
    Brian K.
    17 October 2019 @ 02:59
    The naivety of the Bitcoin Faithful kills me. The gold bugs aren’t much different, but their religion does have some basis in reality.
    • CA
      Chad A.
      18 October 2019 @ 04:36
      Brian, what do you consider real money then?
    • PS
      Price S.
      18 October 2019 @ 07:37
      I'm disappointed to become an adult in this world and in this country, the USA, to come to find out that so many other adults cower at the big bad government. This country was founded on freedom, individual sovereignty, etc. Where is your spirit of standing up for what's right regardless of what the government tries to unconstitutionally push? That's the best you got? The big bad government won't allow it? WE ARE THE GOVERNMENT
    • BK
      Brian K.
      18 October 2019 @ 19:09
      Price S...get a grip.
    • BK
      Brian K.
      18 October 2019 @ 19:18
      Chad A. The money that appears in my account every month. The same money I use to pay bills, buy food, put gas in my car. All kinds of arguments about what makes something ‘money’, but I’m interested in the bottom line. Soon money will be completely digital and cash will essentially go extinct. Maybe it will be based on Bitcoin technology or another technology that actually works, but until then...it’s the dollar. The Government creates dollars and creates a demand for those dollars by requiring them for taxes. Maybe I’m a coward, but I think it’s a good idea to pay my taxes.
    • PS
      Price S.
      18 October 2019 @ 20:12
      In honor of all the men who sacrificed their lives so that we the people could exercise our freedoms and maintain the values that made this country great, I will absolutely not get a grip. Sure, pay your taxes, I pay mine, this is not the issue. Your “government won’t allow it” is a weak argument and you should be ashamed of it. Be an American man. We the people.
    • BK
      Brian K.
      18 October 2019 @ 22:13
      Price, don’t talk to me about sacrifice. I have tours in Iraq and Afghanistan supporting the warfighter and I stood on the tarmac at attention when their bodies were unloaded/loaded on aircraft. Lookup Extortion 17. I dodged rockets in Mosul and Baghdad...24 one night in Mosul that killed a young female soldier. My point is we have laws. The Bitcoin Faithful think they can ignore them...just like Sovereign Citizens and the anti tax crowd. But they go to jail...just like Charlie Shrem.
    • PS
      Price S.
      19 October 2019 @ 00:57
      Laws change according to the will of the people, this is the way America works. I appreciate your service. Bitcoin fixes the war machine.
  • RA
    Ross A.
    17 October 2019 @ 02:26
    Excellent Talk. The outstanding issues i have are; - Why Bitcoin vs [Insert your favorite] Coin? - Lack of scalability. Is it something like 7 transactions a second? That doesn't work. Perhaps there is a solution to this but if [Insert your favorite] Coin rolls it out first then maybe it 'wins'. - Massive transaction costs. The miners don't charge much at the moment because they get freshly minted BCs as a reward. But this is due to stop. When it does, especially given the lack of scalability, and the miners start charging fees (or rtaher to get include in a block you have to offer up a large fee) you won't be buying a cup of coffee with BC. - Quantum computing - No Private Key is safe from this - if and when it comes.
    • DU
      Dan U.
      17 October 2019 @ 03:03
      Most of these points will likely be addressed by Saifedean Ammous in his interview with Marty Bent.
    • Bv
      Berend v.
      17 October 2019 @ 13:12
      @Ross Andreas Antonopolous has deep technical knowledge of Bitcoin and other cryptocurrencies. His take is very simple; Quantum computing isn't there yet and if it is, it would probably not be used on Bitcoin. Similar to how the Allies did not reveal their breaking of the Enigma. Using it in Bitcoin would reveal a nation or party has this capability, making every other technology of encryption useless. Also, Bitcoin is still a far safer store of value than existing finance. I'd worry about your stocks and dollar accounts, before Bitcoin. Obviously, gold would still be better in that scenario. But the main take away is that if that would really be a threat, the world as we know it would collapse. Everything digital would be at risk.
    • PG
      Petter G.
      17 October 2019 @ 20:03
      @Ross: Great questions that are quite common to those new to this space. There are many resources online that discuss these, but in short: 1) First mover advantage. It's a snowball that just keeps getting bigger and drawing more and more talent/capital to it. It's also a protocol. And protocols tend to be *very* hard to displace once they get traction. 2) To keep the Bitcoin network decentralized it needs to be cheap to run a full node. That's why it's slow and clunky by comparison. But on the other hand it's suuuper secure! This is great because protocols built on top of Bitcoin (like the Lightning Network) can then leverage that security while also providing additional features such as high throughput, anonymity etc. Adding a lot of fancy features into the base layer is simply not a good idea from an engineering standpoint. 3) No one knows what the fees will look like once the subsidy goes away. But then again, the base layer was never built to handle small transactions. Have a look at Mary's interview with Saifedean here on RV. They discuss this quite a bit. 4) I've yet to come across a Bitcoin developer who's worried about this. Here's an answer to this by Andreas Antonopoulos: https://www.youtube.com/watch?v=wlzJyp3Qm7s&feature=youtu.be
    • PS
      Price S.
      18 October 2019 @ 07:41
      To add a bit to Petter G's response: the nature of proof of work coupled with game theory and economics dictate that the market will choose the most liquid and secure coin (Bitcoin by far at this point) and this will create a positive feedback loop. Take a bit to understand the innovation that is proof of work to be able to see the feedback loop
  • WB
    William B.
    17 October 2019 @ 01:59
    Very interesting concepts. Bitcoin can be replaced by some other technologies so the hardest money concept doesn’t work for me. But great for speculation if you choose.
    • DU
      Dan U.
      17 October 2019 @ 03:07
      It doesn’t work if one looks at it strictly as a technological phenomenon.
    • PS
      Price S.
      18 October 2019 @ 20:54
      It’s an open-source protocol, it constantly evolves, the space has no patents. If better tech comes on the scene that threatens to replace it, Bitcoin can evolve and adapt said tech for itself. To have the qualities the market deems desirable, a crypto money has to he open source...
  • LB
    Louis B.
    17 October 2019 @ 01:39
    He's interesting, but his knowledge of the history of gold used as money or as a numeraire is far from accurate and flawed. As for the stock to flow argument, i.e. bitcoin's is higher than gold's, that carries no weight. Why? Because the bitcoin is not unique and the protocol can change. Gold's high stock to flow ratio is what gives gold its purpose as money or more accuratley as a numeraire i.e. a standard meeasure of value. That high stock to flow ratio was acheived simply because gold is not consumed, unlike any other good produced and in exitstence naturally on this earth. In other words, it's human action itself that made gold what it is, money.
    • PS
      Price S.
      18 October 2019 @ 20:59
      Proof of work is unique, this is what matters. Proof of work is the innovation. The laws of economics and game theory dictate that there will only be one dominant proof of work money coin. The fact that the Bitcoin protocol can change is a feature, not a bug. I can explain in more detail if you’re interested
  • KK
    Kiwoong K.
    17 October 2019 @ 00:12
    Can someone please help me wrap my head around the faith in bitcoin knowing that it's only usable where technology exists? Do we have electric power or connections to the web where only currencies exist and money does not exist? If we store our currency in something that can be taken away with a simple plug, won't some powerful force want to get a hold of that, for example USA? If we are giving control back to USA, isn't that the same confidence game that we are playing today? Sure bitcoins exist but they can always denominated bitcoins into aetherium, doge, libra and whatever else you want to make anew.
    • PG
      Paul G.
      18 October 2019 @ 04:41
      clearly never been in places where tech doesn't work. bit of 1st world problems.
  • GF
    Gordon F.
    16 October 2019 @ 23:19
    I am not too concerned about whether gold or bitcoin is "better". I am confident that, even in a world where all transactions are in bitcoin (should that ever happen), gold will retain a high value and protect my savings. I am less confident that bitcoin will do the same, simply based on a MUCH shorter history. Fortunately, I don't need to make an either-or choice. I hold some of both, and thus I can watch how things work out with as much confidence as one can have in the world today that I will retain something of value in the future.
  • WW
    William W.
    16 October 2019 @ 21:27
    Very educational and well spoken. Still would like to understand the efficacy in the absence of electricity.
    • AK
      Ado K.
      16 October 2019 @ 22:46
      If electricity disappears in the entire world, most of us will die quick. Then golds best value is to hit people in the head with it, kill them and eat them. All food production today is dependent on high amounts of electricity/energy. Bitcoin is the least of your problem if electricity vanishes.
    • MG
      Mac G.
      17 October 2019 @ 00:11
      If there is a local electricity outage, you cannot transact in Bitcoin. Once the electricity returns then you can. If the whole world loses electricity at the same time then no one can transact in Bitcoin. As soon as the electricity returns the Bitcoin nodes boot up again and begin the process of consensus around the distributed ledger where they left off.
    • MG
      Mac G.
      17 October 2019 @ 00:13
      I think there is a Bitcoin node running on a satellite now too which would be immune to power outages. Consequently, if you had backup protection you could sign and broadcast transactions to the Bitcoin network via satellite in the middle of an outage or the middle of nowhere.
    • DU
      Dan U.
      17 October 2019 @ 03:21
      Transactions can be broadcast over something as simple as a ham radio. Easily charged by hand crank. But if this is what bitcoin is reduced to, we’ll have way bigger problems on our hands.
    • PS
      Price S.
      18 October 2019 @ 21:11
      People have generators, battery power, solar, wind, thermal etc in the temporary outage of electricity from the main grid... I don’t understand what the real concern is here. If the power goes out, we use alternate energy sources until it comes back on. All long-term power outage scenarios don’t seem practical to me but in those scenarios it seems like you’re gonna want some guns and have the ability to generate your own power.
  • CG
    Chris G.
    16 October 2019 @ 20:54
    Fully agree! In every point.
  • JH
    Jesse H.
    16 October 2019 @ 19:39
    V good talk but I don’t agree / see eye to eye with the notion that “Bitcoin is the ultimate hard form of money.” For many reasons, this seems inaccurate to me. Gold is far harder for reasons beyond its stock to flow ratio.
    • DL
      Dan L.
      16 October 2019 @ 21:07
      Interesting. So if hardness is defined in terms of stock-to-flow, how does one achieve greater hardness by some other means? It sounds to me like what you mean is "acceptance," which is something different. What Breedlove is saying that you will lose value by holding softer money, because the market will naturally preference harder money, and so acceptance is bound to follow market preference, regardless of people's feelings about their preferred store of value. Therefore, as a rule, hardness rules.
  • NS
    NICHOLAS S.
    16 October 2019 @ 19:39
    Very concise explanations in just 25 minutes. Well done.
  • VS
    Vikram S.
    16 October 2019 @ 19:23
    This guy really knows his stuff! Excellent summary for those who want to understand Bitcoin. Thanks RV!
  • BS
    Bert S.
    16 October 2019 @ 19:14
    Hard money <=> Soft money Or Hard money <=> Easy money ?
  • DR
    David R.
    16 October 2019 @ 17:56
    When Banks are offering zero or negative interest on fiat money with an IOU note I think both Bitcoin and Gold have a place in this reset that is bound to happen . I don't believe these gold reserve numbers out of China and think they are far greater . I also don't believe we have the true price of gold with the myriad of futures , options covering the claim on one ounce of gold on Comex . To discount gold would be very naive in my opinion , but keep a very open mind on Bitcoin .
  • SP
    Sat P.
    16 October 2019 @ 17:45
    Good video for newbies. I personally only found the last 10 minutes to be new and useful information such as him explaining Bitcoin halving in May 2020 and how that relates to Gold.
  • NB
    Nicholas B.
    16 October 2019 @ 17:32
    "So the funny thing about hard money is rather you understand it or not, it imposes its economic reality on you regardless. So in that sense, Bitcoin being the hardest monetary technology that's ever existed, if you ignore it, you are sort of ignoring it at your own peril. You are ignoring all of these lessons of history that have repeatedly demonstrated that hard money always wins in a free market."
  • RS
    Ryan S.
    16 October 2019 @ 17:20
    Most coherent discussion on Bitcoin and hard money I've seen from RV to date. Thoroughly enjoyed this one. Great work!
  • TH
    Timo H.
    16 October 2019 @ 17:13
    When talking about "bitcoin", are we talking about Bitcoin, Bitcoin Cash, Bitcoin Gold or Bitcoin SV or any future hard fork of the chain? As you may guess, I have an issue with people, who make big noise about the true scarcity of cryptos. As an asset class, they're anything but scarce.
    • JT
      Jose T.
      16 October 2019 @ 17:45
      If i try to con you by giving you a tungsten bar covered in gold and call it a gold bar. Did I just inflate the gold supply?
    • TH
      Timo H.
      16 October 2019 @ 18:33
      Jose, pls tell me, why the original bitcoin is the only real scarce cryptocurrency out there? The forks are technically more or less equally good.
    • NS
      NICHOLAS S.
      16 October 2019 @ 19:45
      Bitcoin is the only, at least most, decentralized of all digital assets. There is no Bitcoin headquarters. That being said; there can be a concentration of miners, which in theory could be commandeered by governments. As hash power increases mining should continue to become more and more decentralized.
    • AK
      Ado K.
      16 October 2019 @ 23:04
      Hallo Timo! If I fork Bitcoin and make Bitcoin bubblecoin, I will not have any hashpower on my chain, therefore it will not be safe. I will not have any network effects in form of thousands and thousands of full nodes running the software, I will not have liquid channels to fiat etc. What I am pointing out is that network effects matter a lot. Trace Mayer has done a brilliant job in listing them, I believe there are 7 or 8 of them Therefore a fork of Bitcoin is kind of me writing gold on a piece of paper and claiming it is gold. Ps. love gold and love Bitcoin, comment is not intended to downplay gold in any way.
    • MG
      Mac G.
      17 October 2019 @ 00:07
      Bitcoin did not introduce digital scarcity natively onto the Internet. Bitcoin introduced scarcity *within the bounds of network effect* natively onto the Internet. Your criticism is tantamount to saying 'don't use Facebook because anyone can just create another social network.'
    • TH
      Timo H.
      17 October 2019 @ 05:35
      @ado, don't confuse "network effect" with "brand value". There is no technical reason, why Bitcoin is the only one being able to have a network effect. Actually, its technical characteristics play against it. For example, if/when the transaction costs of buying Bitcoin become prohibitively high, cheaper, albeit initially possibly a bit less safe alternatives will emerge. Talking about safety, the share of Chinese miners in the Bitcoin network should probably be a cause of concern.
    • Bv
      Berend v.
      17 October 2019 @ 14:47
      @Timo H. “Why are forks not considered inflation?” The best analogy I ever heard was this; If the US prints USdollars and Zimbabwe suddenly decides to print Zimbabwedollars, does that diminish the value of US dollars? The comparison is true, because the USdollar is backed by its power to enforce that. As someone below stated, Bitcoin as mainchain, keeps the security (miners, nodes). The other fork do not. As such it devaluates immediatly after separating from the main chain. Because their value is by node and mining signalling, not backed by the majority of power. It is like introducing a brand new national currency without any backing or underpinning value. The only difference is that the price starting point is the same as Bitcoin upon inception. As for scarcity, I think that question is not relevant to the value, when comparing it to other crypto currencies. Bitcoin Cash, which has an almost identical protocol, is also scarce, but its value is significantly lower. So we can safely conclude that it is not directly what attracts value to the currency in this space. “There is no technical reason, why Bitcoin is the only one being able to have a network effect” There is. It is the technical rules that attract and I’ll explain why: Say all the chinese miners are suddenly cut off from mining, Xi has a stroke and decides that his-will-be-done. A large portion of the hashpower disappears. Bitcoin blocks would be mined less and the network would be less secure. Less hashpower. If that happens, the Bitcoin protocol lowers the hash difficulty to such a degree, that the financial incentives become too large to ignore for other mining parties. Basically the protocol makes it cheaper to mine new blocks.Therefore attracting new miners and hashpower to its network. This happened already with the Bitcoin Cash fork. Where there was a struggle for miners and both BTC and BCH were swinging wildly in hashing power, due to the changes in difficulty. In the end, it was just miners chasing profitability, but the outcome was already set from the beginning, which brings me to the second technical reason why Bitcoin attracts. The vast majority of nodes (users) signalled Segwit to be the main chain. Bitcoin Cash did not receive enough support from nodes and that network effects determines the amount of use for Bitcoin Cash. Which also changes the value of the Bitcoin Cash that miners receive for mining the blocks from Bitcoin Cash. This perfectly demonstrated that the network effect is more important to Bitcoin price and security, than the technical rules. But the technical rules ultimately only serve to enhance the network effect. Bitcoin is now a factor 30-50 timse more secure than Bitcoin Cash, due to the hashpower. Which ever Bitcoin chain is the main chain, holds all the value. As for the 51% attack. Yes. This is in theory undesirable. But please understand that 51% of all miners would have to agree to undo one block. Say that they were ever successful at tampering with that block and they would allocate a massive amount of Bitcoin to themselves. Where would they sell it? And to who? No off ramp would ever be able to process that much, that quickly, before their fork of Bitcoin (this would cause a fork, because the other 49% would have consensus differently) would become utterly without value. Their fork would be solely mined by them. Nobody would want it. And they would have zero income for their efforts. It would be akin to pulling a goldfinger on their own goldmine. With the effect being that the other fork would just keep on going. Scarred, yes, but with a sudden reduction in hashing power, the difficulty of the now far more decentralized fork would immediately make it more profitable to mine. Everyone who had Bitcoin before the attack, now has Bitcoin on both chains. Chain China is centralized, it dies out and its value will be nothing. Chain 49% simply absorbs all the users and value that Chain China had at inception.
    • PS
      Price S.
      18 October 2019 @ 21:22
      Proof of work is what is scarce. Because of the nature of proof of work, laws of economics and game theory, only one dominant proof of work money coin will come to be. This is because of a positive feedback loop that looks like this: User chooses most secure and liquid coin -> price goes up, liquidity goes up -> miners follow price increase and add hashpower -> security goes up -> miners have to sell to cover costs -> liquidity goes up -> user chooses the most liquid and secure coin...
  • MS
    Matthew S.
    16 October 2019 @ 17:11
    The most coherent argument I have heard in favor of bitcoin. However, bitcoin's scarcity is undermined by the ease in which competing cryptos can be created. There is a natural governor on gold supply, whereas we have seen competing cryptos sprout up endlessly. All of the characteristics of bitcoin can be engineered in competing cyrptos, so why is bitcoin unique?
    • TM
      The-First-James M.
      16 October 2019 @ 18:04
      Best/Most Talented Development Team involved, plus ongoing network effect of slowly but surely increasing adoption. Why would I want to own some sh*tcoin established by a handful of less talented devs who fork the source code...?
    • PJ
      Paul J.
      16 October 2019 @ 18:31
      This is a great question. Why bitcoin is unique compared to other cryptos is not readily apparent. However, there are compelling arguments that make bitcoin stand apart from ALL other crypto-currencies. First of all, the network effects (see the work of Trace Mayer) of bitcoin are far superior, making it the most liquid crypto by far. The greatest liquidity begets more liquidity, which is why BTC (bitcoin) gets most of the headlines in the news and growing interest from retail and professional investors. Yes, the characteristics of bitcoin can be engineered and copied, but bitcoin enjoys an "immaculate conception," i.e., there is no founder or centralized organization to attack or shut-down. Bitcoin is open-source computer code, and many of the brightest protocol software engineers in the world continue to contribute to its ongoing improvement. Bitcoin evolved and spread around the internet (by individuals running full nodes--or copies of the entire history of bitcoin transactions) under the radar of scrutiny from regulatory bodies. As one can see, Libra--Facebook's proposed crypto--is facing (pun intended) major backlash from governments all around the world. There is no "there there" in bitcoin to attack. As open-source software, bitcoin is protected by the first amendment as free speech. And, from my point of view (as a telecom engineer), the strongest argument for bitcoin being unique is how the internet itself is structured. This is a bit esoteric for non-techies, but not really complicated in principle. Think of bitcoin as a new type of data that can be transmitted over the interent, data that carries/stores value. The rules for communicating digital data over the internet are built in layers known as protocols. These layered protocols ossify over time because standardized rules for communicating keep the internet functioning efficiently. Bitcoin can be thought of as the base-layer protocol for transferring digital value over the internet. In fact, bitcoin is a kind of quantum leap in terms of what can now be accomplished over the internet. Value can be transferred without ever requiring permission from a centralized third-party to/from anyone with an online connection. It's still early. Remember when the internet first started being used, few, if any, thought we'd be able to stream live video anywhere and everywhere throughout the world. Someday, the bitcoin protocol will allow all manner and sorts of financial streaming, digital contracts, etc. Because only 21 million bitcoin (₿ ) will ever be created, it's very possible that the amount of value being transacted per bitcoin will increase dramatically over time.
    • AK
      Ado K.
      16 October 2019 @ 23:13
      Hallo Matthew! The simplest way to answer is that Bitcoin is different because of established stock to flow with a proven decentralization that has withstood several attacks to change the code, combined with 7 network effects. To further explain these would honestly take a almost an essay. Let me summarize it with nobody can be in charge because they can change the emission schedule then, the coins have to be distributed through a decentralized proof of work mining, and Bitcoin has a 10 year head start in stock to flow in this form. Network effects include hashpower, developers working on the biggest chain, liquid channels to fiat, established brand, thousands of running full nodes etc etc. When you look at it in practice it is impossible to make a "new Bitcoin"
    • SB
      Salvatore B.
      17 October 2019 @ 01:58
      It's actually quite simple, it is the only completely decentralized option. If I create a fork of bitcoin, I would be in charge of marketing it, making deals with exchanges, hiring developers, etc. A store of value or form of money cannot have a CEO. The most spectacular and fascinating thing about Bitcoin is that Satoshi stepped aside because they realized this, and we have no idea who created it. This aspect does not get enough attention. No fork can ever compare to Bitcoin.
    • PS
      Price S.
      18 October 2019 @ 21:24
      Proof of work is what is scarce. Because of the nature of proof of work, laws of economics and game theory, only one dominant proof of work money coin will come to be. This is because of a positive feedback loop that looks like this: User chooses most secure and liquid coin -> price goes up, liquidity goes up -> miners follow price increase and add hashpower -> security goes up -> miners have to sell to cover costs -> liquidity goes up -> user chooses the most liquid and secure coin...
  • PG
    Philippe G.
    16 October 2019 @ 16:58
    Interesting thesis
  • SW
    Scott W.
    16 October 2019 @ 15:58
    This is a masterful presentation, end-to-end.
  • TJ
    Terry J.
    16 October 2019 @ 15:04
    Excellent analysis and overview of bitcoin's potential to become the future money! I loved some of the analogies Robert used and his inversion of the adage, "time is money". Only time will tell of course whether Bitcoin can truly usurp gold as true money in the eyes of investors who worry about the fiat credit binge that took began in 1971 before accelerating exponentially in recent decades. I really appreciate the opportunity to hear the views of experts from both the gold and crypto camps on this important subject. Great series RV.
  • JR
    Josiah R.
    16 October 2019 @ 14:29
    Robert did a great job of articulating the bitcoin argument. His point about softer monies suffering relative to harder monies throughout history is important, as is his point about the current environment where there is a oversupply of dollars chasing an undersupply of valuable assets, and that in this environment bitcoin could be expected to perform even better than otherwise.
  • RW
    Ryan W.
    16 October 2019 @ 08:21
    Somewhat typical of most crypto advocates, this came across with a lot of opinion, but not enough supporting information to let the listener draw their own conclusion or lead the view to it. Several points calling out "problems" with gold are what others might consider advantages, again, common in the crypto advocate camp. Here however, Bitcoin is referred to as a technology when it is blockchain that is the technology. Bitcoin is one of many tokens, just as USD is one of many currencies. This would have been more interesting if the discussion focused on Bitcoin vs other tokens; other RealVision videos talking about the position of the USD as a reserve currency and whether it will rise or fall longer term. There was no discussion about the importance of cryptocurrency features in relation to credit in the world economy. I did, however, enjoy listening to this guest. I took away his interesting comments relating stock-to-flow ratios and inflation, which gives me something to explore deeper.
    • MP
      M P.
      16 October 2019 @ 12:34
      The main drawbacks of gold as base money are the need for money substitutes due to divisibility problems and high costs of verification, storage and transportation. Mitigation of these drawbacks requires centralization in trusted third parties. It is a historic fact, not an opinion, that the trust is eventually broken and society ends up with a debased currency. These are simply the risks of a physical commodity. Digital commodity is subject to different risks. Regarding Bitcoin, calling it one of many tokens is like calling gold one of many metals. Bitcoin is not just the code, which can be copied and given a different brand. The Bitcoin network has properties that cannot be replicated by other tokens: Highest degree of decentralization securing the immutability of consensus rules (e.g. the 21M supply cap). By far the highest liquidity. Proof of Work consensus where only the #1 PoW chain is secure. Immaculate conception - no premine, no fundraise, founder anonymous and gone, founder never sold out, first 2 years Bitcoin was a worthless obscurity. Bitcoin is a magnet for the best developers in the "crypto space". Bitcoin is the best brand in the "crypto space". These advantages are strengthening exponentially over time due to network effects.
    • MD
      M D.
      16 October 2019 @ 14:29
      Tech has solved the gold divisibility problem. Many physical gold storage companies offer debit cards, which permit the gold owner (via an app) to sell gold and buy a little fiat to credit fiat to the card. I can then spend it anywhere Visa or Mastercard is accepted for literally any amount, no matter how small. Very convenient.
    • SS
      Stan S.
      16 October 2019 @ 14:40
      Matej, Which of those bitcoin benefits genuinely cannot be replicated given enough time and money? Honest question. Thank you.
    • NB
      Nicholas B.
      16 October 2019 @ 17:37
      "Bitcoin is referred to as a technology when it is blockchain that is the technology. Bitcoin is one of many tokens, just as USD is one of many currencies." This statement isn't entirely true. There are zero cryptocurrencies like Bitcoin in the sense that Bitcoin is the only digital asset that is 100% decentralized. No other "Crypto" is like Bitcoin in that sense.
    • PJ
      Paul J.
      16 October 2019 @ 18:47
      Respectfully, I have to correct the record and say that blockchain is NOT the critical technology here. This is a misconception that has been spread by many who are either ill-informed about the technical details of how Bitcoin and other crypto-currencies really work, or who are hoping to get rich quick by printing their own token. A blockchain is simply a "chain of blocks" of data and is only part of what makes Bitcoin unique. This data structure existed long before Bitcoin. See my reply to The-First-James above for some of the reasons Bitcoin stands apart from other crypto currencies. The stock-to-flow work being done around Bitcoin right now is fascinating. If you use Twitter, check out the work of PlanB and Saifedean Ammous. Here is a link to one of PlanB's Medium articles that discusses stock/flow ratios and valuation of Bitcoin. It's my understanding PlanB is an upcoming guest on this series. https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25
    • PG
      Paul G.
      18 October 2019 @ 04:47
      no one ever mentions every time the authorities confiscate BTC
    • PS
      Price S.
      18 October 2019 @ 21:41
      The technology is proof of work. Blockchain can take many forms. Proof of work enables a blockchain that embodies the desirable characteristics of a crypto money. The nature of proof of work dictates that the market will choose one dominant crypto money