Description: Information contribution we sent by e-mail to Dr. Jordan B. Peterson 🙂 regarding the “Economic Storms are Gathering” YouTube video interview with Peter Schiff.
Dear Dr. Jordan B. Peterson, Peter Schiff, Gold Enthusiasts, Crypto Community and Internet readers
Greetings!
As an ardent follower of your discussions, I must commend you, Dr. Peterson, for your insightful contributions as a distinguished intellectual in this ongoing conversation. With your permission, I would like to momentarily assume the role of Assistant Professor and contribute my unique insight to this brain trust, focusing on the Gold/Bitcoin debate, in collaboration with you and Mr. Schiff.
By combining my expertise in computer science and psychology with Dr. Peterson’s psychological acumen and Peter Schiff’s financial expertise, this email serves as an interdisciplinary brain trust capable of rigorously exploring the complexities of the Gold/Bitcoin discourse. Together, we aim to offer a comprehensive and authentic understanding of the subject matter, contributing valuable perspectives to the internet regarding the intricacies of this fascinating debate. Our collaborative insights from this brain trust will be shared on our website at https://skillsgaptrainer.com in the Articles section.
Subject: Contributing SGT Insight to the Gold versus Bitcoin Debate
Peter Schiff’s assertion that “people preferred gold as money” and that “it beat out all other forms of money” is well-founded. He often emphasizes the crucial aspect of money—the store of value property—but it is essential to recognize the various sub-properties of value and to delineate the elements of value beyond the “price” sub-property of VALUE. At the moment, network effect fundamentals along with 14 years of “exponential like” price increase evidence seem to support the notion of an ongoing “store of price” capability, when one holds Bitcoin long-term and disregards any level of volatility from affecting their investment decisions.
Considering the medium of exchange property, Bitcoin may, under certain circumstances, surpass gold due to the convenience of remote web transactions, reduced transaction costs, and expedited processing times. This superiority is contingent upon the following conditions: (1) the internet functions without any hindrances as it does today, (2) Bitcoin’s volatility is minimal during the exchange, and (3) privacy is not a priority in the transaction. If these three conditions are met, Bitcoin can be deemed a superior medium of exchange. This advantage may become more pronounced as Bitcoin’s volatility decreases in the future, as predicted by the ongoing adoption trajectory. Additionally, if developers implement privacy features, though their willingness to do so remains uncertain and unlikely, Bitcoin’s superiority could further solidify. Furthermore, the commissions associated with selling gold are relatively high, making Bitcoin a more favourable medium of exchange for short-term investments when privacy is not a concern. As Bitcoin’s volatility diminishes over time, its potential to outperform gold as a medium of exchange becomes increasingly likely.
Speaking on behalf of gold, Peter Schiff has emphasized the vital store of value property, wherein gold appears to maintain a lead over Bitcoin. It is crucial to adopt a pragmatic approach when examining the store of value concept, recognizing that it comprises multiple sub-properties such as privacy, price, anti-fragility, counterparty risk, and eternality (resistance to global catastrophes on an indefinite basis), among others.
In terms of the privacy property, civilizations have long cherished privacy as a valuable attribute. The level of authority and freedom that citizens possess is often correlated with the extent of privacy available to them, which in turn contributes to market value. Gold offers a degree of privacy, aligning with civilized values. However, Bitcoin currently lacks this privacy feature, as its developers have not yet endeavoured to implement it. Consequently, Bitcoin’s store of value is inferior to gold’s when considering privacy as an aspect of value.
Regarding anti-fragility, or the “resistance to any catastrophe in eternity,” Bitcoin has exhibited stable growth and maintained its value under controlled conditions over a minuscule period of time. However, it has yet to prove its true anti-fragility by withstanding numerous severe catastrophes and extreme volatility associated with conflicts, revolutions, and financial market fluctuations, as gold has done for millennia. The full set of potential disasters and stress tests that encompass all possible catastrophes in cosmic reality has not been thoroughly examined on a long-term basis or even an inter-generational basis; thus, the data will require at least another century, most likely two centuries, before we can reasonably gauge and comprehend Bitcoin’s approximate level of resilience and anti-fragility.
Bitcoin must endure at least one, if not two, 100-year investment cycles to determine its ability to transfer wealth inter-generationally across the full four demographic cycles as the nature of humanity evolves from one generation to the next. To argue that a digital currency can surpass traditional forms of money while overlooking the historical lessons and established principles resulting from thousands of rigorous stress tests faced by gold is both premature and unwise. Acknowledging the secular cycles, as described in literature such as “The Fourth Turning” and studies on “secular cycles”, is crucial for a comprehensive understanding of the need for inter-generational resilience and the need for a monetary asset to be resilient in bridging the gap from one 100 year cycle to the next 100 year cycle. (Note: Stock Markets do not behave along the same trends over the entire span of 100 year cycle, the same way they behaved from 1970 to 2023 in a continual rise, hence the need for hard assets such as physical commodities and digital commodities (revenue generating, open-source, open standards, decentralized apps hosting blockchain networks), which are missing in every portfolio managed by a bank today, compromising the intergenerational wealth transfer capability of humanity.)
The 14-year track record of Bitcoin’s price stability and rapid growth, albeit impressive, has only experienced two financial stress tests in 2008 and March 2020. From its peak in October 2007 to the lowest point in March 2009, the Dow Jones Industrial Average (DJIA) declined about 54%, falling from around 14,164 to approximately 6,469. The S&P 500 experienced a similar drop, declining about 57% from its peak of around 1,565 in October 2007 to a low of about 677 in March 2009. Glaringly, obvious missing potential stress tests that are missing are where the major indexes hit -99%, the stock markets are frozen, the stock markets halted for a day, the stock markets are halted and frozen for a decade, the markets are closed and shut indefinitely, the interest rates are raised to 50% and so forth. Thus, under numerous assumptions such as “normal boom bust cycle”, “normal financial market growth”, “perfect internet access across the world,” “a limited 14-year track record” and a “Fed driven” environment, Bitcoin has been a satisfactory “store of price”. However, Bitcoin enthusiasts should exercise caution and patience as the digital currency continues to develop and mature, for its true resilience can only be evaluated after withstanding numerous significant stress tests akin to those gold has faced throughout history. Patience is victory!
In light of the ongoing debate between the proponents of Gold and Bitcoin, it is vital to consider the potential anti-fragility issues with Bitcoin, particularly in terms of its reliance on the internet and associated infrastructure. The following list enumerates several concerns that warrant further examination:
- Cybersecurity Vulnerabilities: The internet relies on a limited number of Domain Name System (DNS) servers, which are responsible for routing traffic. A successful cyberattack or physical assault on these servers could disrupt large portions of the internet, highlighting the lack of redundancy and decentralization in the current DNS infrastructure.
- Physical Infrastructure Risks: Internet cables are susceptible to damage by covert or open submarine warfare, whether accidental or intentional, which could lead to significant disruptions in global connectivity.
- Space Infrastructure Risk: A reliance over reliance on satellite communications technologies in the near future, could create an internet resilience risk and dependency on satellites, which are easy to destroy with current missiles, EMP or cyber technologies.
- Political Interference: Authoritarian regimes can exert control over their national networks, potentially undermining the global decentralization of Bitcoin.
- Centralized Control Points: The internet’s essential components, such as cryptographic keys and root servers, are managed by a select few entities, which raises concerns about potential manipulation or compromise.
- Environmental Hazards: Natural disasters, such as storms and extreme temperatures, can cause widespread internet outages.
- Geopolitical Fragmentation: There is a growing risk of the internet being segmented by nation-states or alliances, leading to the formation of distinct, firewalled networks.
- The Rise of Artificial Intelligence: The advent of artificial intelligence could potentially break encryption protocols.
- The Rise of Quantum Computing: The advent of quantum computing could potentially break encryption protocols, as these technologies have the potential to perform calculations that are currently considered infeasible for classical computers. In particular, quantum computers can perform certain types of calculations much faster than classical computers, which could potentially render some types of encryption vulnerable to attacks.
- The Rise of Artilects: The advent of Artilects can break encryption protocols. Advances in computing power through the miniaturization of processing architectures at the atomic scale have been discussed in literature, including in Hugo de Garis’ book ‘The Artilect War’. This book explores the potential consequences of advanced artificial intelligence and computing technologies, including the development of so-called “artilects” – artificial intellects that are vastly more intelligent than humans.
- Resource Limitations: The scarcity of critical minerals, as documented in numerous studies, the USGS, and best selling textbooks, may impede the production of Bitcoin mining servers, as soon as 10 to 30 years from now, thus limiting the network’s hash rate and overall performance.
- Decentralization Challenges: Bitcoin’s decentralization is predominantly limited to the electronic domain, with vulnerabilities persisting in non-electronic aspects.
- Centralization of Mining Pools: There is a risk that mining pool operators could collude, effectively centralizing the mining process.
- Concentration of Mining Hardware: The manufacturing and distribution of mining servers could become increasingly centralized, leading to potential monopolistic control.
- Global Wars: Widespread military conflicts can lead to significant disruptions in internet infrastructure and connectivity, thereby undermining the functionality of Bitcoin and other digital assets that rely on the internet, and even rendering Bitcoin inaccessible.
- EMP Attacks: Electromagnetic pulse (EMP) attacks, whether initiated by rogue actors or foreign adversaries, have the potential to knock out continental or national power grids, thereby crippling the internet and rendering Bitcoin inaccessible.
- Pandemics & Grid Failures: Large-scale pandemics can strain power grid infrastructure, causing failures and disrupting internet connectivity. This, in turn, would impact the functionality of Bitcoin and other digital assets that rely on the internet.
- Solar Flares & Geomagnetic Storms: Solar flares and geomagnetic storms can induce currents in power transmission lines, resulting in voltage fluctuations and potential grid failures. Such events can disrupt internet access, posing a risk to Bitcoin and other digital assets that depend on the internet for their operation.
- Finite Resource Threats: Finite resources and the growing strain on global resources due to population growth and increasing consumption patterns, especially in the emerging and frontier markets, which could compromise the ability to maintain internet infrastructure, server infrastructure, and computing power for Bitcoin. Finite resources and mineral scarcities make it difficult to produce and maintain Bitcoin mining servers and increase the network’s hash rate.
- The Rise of Global Technocracy: The rise of tyrants or oppressive supranational corporate partnerships and/or political alliances shutting down networks and influencing nation states to ban bitcoin or criminalize bitcoin.
While this list is not exhaustive, it underscores the importance of addressing the inherent risks and limitations associated with Bitcoin’s reliance on the internet and its infrastructure. A comprehensive evaluation of these concerns is essential to fostering informed discussions on the merits and drawbacks of Bitcoin as a store of value and medium of exchange.
These points emphasize the various threats and challenges that Bitcoin faces due to its dependence on the internet, power grid infrastructure, and finite resources. Stakeholders must consider these risks and explore potential mitigations when evaluating the long-term prospects of digital currencies as stores of value and mediums of exchange.
Addressing Bitcoin’s Properties as Discussed by Jordan Peterson
In response to Jordan Peterson’s remarks on Bitcoin, the following points address the veracity of the assertions made:
- Decentralization and Corruption – Although Bitcoin’s decentralized nature does provide a degree of fault tolerance, it is important to note that this resilience is limited to a single dimension, namely the internet domain. The internet is not without its vulnerabilities, and as such, Bitcoin’s decentralization does not render it immune to corruption or significant price fluctuations.
- Scarcity – It is accurate to say that Bitcoin becomes scarcer over time, as the supply is capped at 21 million coins, and the mining rewards decrease periodically.
- Work Required to Obtain – Bitcoin’s connection to the physical world through its energy-intensive mining process does indeed contribute to its status as the “king of cryptos.” This relationship highlights the potential benefits of integrating gold within future monetary systems to ensure greater security for humanity.
- Distributability – While Bitcoin can be easily distributed, its initial allocation is not necessarily equitable. The existing wealth disparity in society, characterized by the “99% versus the 1%” dynamic, could potentially be exacerbated if Bitcoin were to become the sole global monetary standard. Early Bitcoin adopters possess significant concentrations of the digital asset, which may result in perpetuating wealth inequality.
To address these concerns,
we suggest citizens and institutions consider adopting a diversified approach, including Gold, Bitcoin, and one or two additional open-source, fairly distributed (public-infrastructure fundamentals), cryptocurrencies such as Ethereum and Cardano, or others which rise provided they develop good network fundamentals, good digital commodity value fundamentals, and efficient proof-of-stake consensus mechanisms. This strategy would not only help mitigate the inflationary issues associated with fiat currencies but also contribute to a more equitable distribution of wealth.
It is our recommendation that,
instead of seeking an idealized, singular monetary design, humanity should embrace a multifaceted approach that incorporates several robust systems operating in conjunction with one another. By implementing a hybrid system consisting of two to four inflation-resistant monetary assets, we can address the shortcomings of previous monetary systems, including issues related to anti-fragility, wealth distribution, inflation, and privacy.
Such a portfolio would encompass both physical and digital assets,
acknowledging the need to preserve the tangible aspects of human experience while also leveraging the benefits of virtual value representations. This approach parallels the concept that artificial intelligence should augment, rather than replace, human existence, ensuring a comprehensive and secure solution for our species.
In pursuit of a resilient future,
characterized by strong individuals and equally sturdy monetary systems, we encourage open dialogue and the sharing of knowledge. We suggest that Mr. Peterson consider hosting discussions with individuals such as Canadian Prepper, Charles Hoskinson, and Vitalik Buterin. These insightful conversations would contribute to a broader understanding of the complexities surrounding the design and implementation of comprehensive monetary systems that cater to the diverse needs of humanity in the current economic climate.
Sincerely,
Skills Gap Trainer
A comment we posted for this video on Jordan B Peterson’s YouTube channel:
We enjoyed the crystal clear discussion in ‘Economic Storms are Coming’, featuring the esteemed Mr. Peter Schiff and Dr. Jordan B Peterson. Both Schiff and Peterson are true luminaries in their fields – business, politics, economics and psychology.
Schiff’s relentless commitment to promoting economic literacy and his tenacity in the private sector, particularly with his gold business and numerous financial ventures, are a testament to his dedication. Beyond his entrepreneurial endeavours, Schiff’s commitment to providing a financial safety net for the public highlights his role as a protector of the public’s financial well-being and solidify his role as guardian of public economic, business, and economic health. His comprehensive and intricate radio streams and podcasts may be complex, but they reflect his commitment to sharing valuable insights with the public. Additionally, Schiff’s deep sense of political responsibility to elucidate public understanding on governance issues is truly commendable. His forthright communication of ethical governance principles has become a cornerstone for many. Our hope is that the excellence in teaching that Mr. Schiff demonstrates, whether it’s in Austrian economics, business, or politics, is recognized universally. We wish that one day the Austrian School of Economics considers awarding Mr. Schiff with an honorary degree to respect and acknowledge his status as a teacher or professor of the world in these critical domains of business, economics and political theory, if not at the very least in economics. We eagerly anticipate more of such compelling and enlightening discussions.”
Similarly, Dr. Peterson, a true Canadian hero, tirelessly advocates for his fellow citizens. His unwavering support for free speech and his efforts to promote critical thinking resonate with many, making him a beacon of hope in these challenging times.
Both Schiff and Peterson, in their unique ways, demonstrate an unyielding commitment to public service, public safety and intellectual enrichment. As pertaining to Canada, this commitment is echoed by Pierre Poilievre, who has emerged as a significant figure for his people and for humanity as part of his own heroic journey.
We hold immense appreciation for their tireless efforts to foster understanding and encourage forward-thinking in their respective domains. – SGT
Related books and resources:
“The Bitcoin Standard: The Decentralized Alternative to Central Banking” by Saifedean Ammous – This book provides a thorough explanation of the concept of Bitcoin and argues for its economic utility, primarily focusing on its function as a decentralized alternative to central banking.
“Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money” by Nathaniel Popper – Offering a narrative history of Bitcoin, this book provides context and background that can help readers understand the rise of cryptocurrency.
“Gold: The Once and Future Money” by Nathan Lewis – This book explores the history of gold as money and its potential future role in the global financial system, complementing the sections of our post discussing gold’s enduring value.
“The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order” by Paul Vigna and Michael J. Casey – This book is an in-depth exploration of how cryptocurrency is affecting the global economic order, which could deepen understanding of the debate between Bitcoin and gold.
“The Fourth Turning: What the Cycles of History Tell Us About America’s Next Rendezvous with Destiny” by William Strauss and Neil Howe – As our post mentions secular cycles, this book’s exploration of historical patterns and their implications for the future could provide readers with a broader context.
“This Time Is Different: Eight Centuries of Financial Folly” by Carmen M. Reinhart and Kenneth S. Rogoff – Offering a comprehensive look at financial crises throughout history, this book can add depth to the economic aspects of our discussion.
“Cybersecurity and Cyberwar: What Everyone Needs to Know” by P.W. Singer and Allan Friedman – Given our discussion of cybersecurity risks to Bitcoin, this book can provide readers with a background on the broader implications of cybersecurity.
“Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy” by George Gilder – This book discusses the potential shifts from centralized to decentralized digital structures, including blockchain, offering perspectives that complement our debate.
“The Sovereign Individual: Mastering the Transition to the Information Age” by James Dale Davidson and William Rees-Mogg – This book’s predictions about the rise of individualism and the decline of nation-states with the advent of digital technology could offer additional insights into the discussion of Bitcoin versus gold.
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