My Weekend Tiff With Peter Schiff

Over the weekend, I responded to a tweet from Peter Schiff with a question. He replied. It’s time for a discussion about “value.”

Over the weekend I wrecked my Twitter notifications for 24 hours by replying to a Peter Schiff tweet with a simple question. To my surprise and enjoyment, he responded. While he didn’t actually answer the question, it created this blog post so I’ll forever be thankful to a fellow content creator for giving me a catalyst for some content creation.

Before we get to the fun, Peter is a financial commentator who I have admittedly learned a great deal from over the years. I like Peter a lot. I listen to his podcast occasionally. He’s a big time advocate for gold (as am I) and he runs a couple of gold-related businesses (I don’t). He also loves hates Bitcoin and tweets about Bitcoin the way a scorned lover might fixate on an ex. Here’s the original Tweet:

Peter Schiff @PeterSchiff

Reporters are asking crypto "experts" how low #Bitcoin or #Ethereum prices may fall. The problem is that all of the so-called experts they are asking work in the #crypto industry. They're shills, not experts. Anyone who really understands crypto doesn't work for a crypto company.

Here’s my response:

Mike Fay @faybomb

@PeterSchiff Applying that logic, should we stop taking your views on gold seriously?

His response:

Peter Schiff @PeterSchiff

@faybomb #Gold actually has value. #Bitcoin and #Ethereum do not. So that's a big difference. If you know crypto is a scam you either don't work in the crypto industry, or you're a liar and a fraud.

Peter Schiff has 750k Twitter followers. His response to my tweet opened up my account to an absolute flood of notifications from people liking, retweeting, responding to him, and responding to me. It was friggin’ bananas. I’ll tell you what, I don’t want the “influencer” life. That stuff is no joke. I’m perfectly happy with a modest following of people who are intellectually curious.

What’s crazy though is how much this interaction with Peter proves the tribalism in finance that I’ve been talking about lately. Even though this exchange created a scenario where I had more sustained notifications from Twitter in any 24 hour period than I can ever remember, my tweet to Peter that generated all of this activity wasn’t even the biggest driver of impressions from that day! My quote tweet of Michael Gayed from just four hours earlier actually produced double the imps but about a fourth of the likes:

Mike Fay @faybomb

Block out the noise. Understand this tweet. It is spot on. Be humble. Follow smart people who disagree with your thesis. And put yourself in a position to survive #CryptoWinter

Michael A. Gayed, CFA @leadlagreport

The problem isn’t Bitcoin. The problem isn’t Dogecoin. The problem isn’t Ethereum. The problem isn’t Shiba Inu. The problem isn't Solana. The problem is overconfidence. Overconfidence leads to leverage. Leverage leads to crashes. Few understand this. #cryptocrash

Why is that? For one, Gayed retweeted my quote to his entire base of followers while Peter just replied directly. But also because of the tone of the messaging. I was challenging Peter. I was agreeing with Michael.

What is value?

In my opinion, Peter’s response, and numerous responses from others, point to the fundamental flaw in the entire argument from the gold-only perspective. Peter seems to think that value is something tangible. That’s not necessarily true. In most cases, it probably is. But value is a completely subjective, emotional attachment to something that can vary by person and by environment. Here’s a thought experiment:

What has more value; a 24 karat gold ring that weighs 6.5 grams or a 16 ounce bottle of water?

To just about anyone, the gold ring has more value. It has beauty. It has utility. It has a melt value that is roughly $400 at the moment. But what about after a 10 mile trek in the Sahara with only isolation and an empty canteen? Which item has more value when you’re on the brink of death and need water?

The point is value is not always so clear. Perhaps the value Peter claims to ascribe to Bitcoin (none) might not be the same as the value ascribed by a Zimbabwe hyperinflation survivor.

The Truth

As I said, Peter Schiff has 750k followers. In October of 2020, he had just 300k. Like it or not, Peter’s constant tweeting about Bitcoin has grown his audience and reach. His personal brand and podcast have probably been beneficiaries of his Bitcoin coverage. His podcast is ad-supported. So there’s almost a certainty that he has earned revenue from talking about Bitcoin. Whether he’ll ever admit it or not, Peter has likely extracted a tremendous amount of personal value out of Bitcoin. That’s pretty good for a worthless token.