That is right. Bitcoins are not gold and the market is so illiquid that manipulations and bubbles probably abound. That said, Bitcoins are a pseudo-monetary system completely different than gold or the other fiat monies. Remember the definition of money, money is a store of value and is accepted as medium of exchange. That is what made gold and other precious metals money for centuries. Gold's limited supply provided a store of value, and it was 'deemed' a medium of exchange. There is nothing to preclude Bitcoins deem worthiness.
Additionally, I think Schiff is being too critical of Bitcoins here. Are Bitcoin prices being manipulated and are are they in a bubble? Probably. But even if that was a fact, that does not damn the Bitcoin into eternal hell. Throughout the history of capitalism, new ideas, products and business models worth anything have typically been pushed into bubbles via the flood of capital and entrants. The list of examples is vast and the history deep. The length of explanation is too much to describe here but a list of example includes trains, automobiles, electricity, phones, computers, and the Internet to name just a few. Bubbles will crash and many will be wiped out, but when all clears the infrastructure remains in place to grow anew, grow stronger. Will Bitcoins show the same dynamic? Only time will tell. As I have stated before, Bitcoins show some signs of being a disruptive innovation, countered by the fact that the Bitcoin value chain plugs into the current monetary system. I would not speculate on Bitcoins, but also I think that more is going with the digital currency than its difference with gold.
Additionally, I think Schiff is being too critical of Bitcoins here. Are Bitcoin prices being manipulated and are are they in a bubble? Probably. But even if that was a fact, that does not damn the Bitcoin into eternal hell. Throughout the history of capitalism, new ideas, products and business models worth anything have typically been pushed into bubbles via the flood of capital and entrants. The list of examples is vast and the history deep. The length of explanation is too much to describe here but a list of example includes trains, automobiles, electricity, phones, computers, and the Internet to name just a few. Bubbles will crash and many will be wiped out, but when all clears the infrastructure remains in place to grow anew, grow stronger. Will Bitcoins show the same dynamic? Only time will tell. As I have stated before, Bitcoins show some signs of being a disruptive innovation, countered by the fact that the Bitcoin value chain plugs into the current monetary system. I would not speculate on Bitcoins, but also I think that more is going with the digital currency than its difference with gold.
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