Puerto Rican Regulators Closes Peter Schiff’s Bank – a Case for Decentralization?

Puerto Rican authorities have closed down the Euro Pacific Bank, a local financial institution that belongs to Peter Schiff, the world’s most vocal Bitcoin (BTC) critic


Sharing his ideas on Twitter, Schiff said the closure of his bank was unjustifiable, given that the media knew about the closure even before he did. He, citing the banking regulators in the US territory, claimed the bank did not meet the required capital to continue operations, a rule he was not aware of from the start.

“Despite no evidence of crimes, Puerto Rico regulators closed my bank anyway for net capital issues rather than allow a sale to a highly qualified buyer promising to inject capital far in excess of regulatory minimums. As a result, accounts are frozen, and customers may lose money,” he tweeted.

Schiff said he has plans to sell the bank in which he will realize as much as $17.5 million in follow-up tweets from the proposed sale of the firm to a ready buyer who will inject the needed capital. He claims the regulator’s position became more complicated as they were more concerned about the bad press about him.

The regulator allegedly blocked the sale because there was a clause in which Schiff will own a 4% stake in the new entity that purchased the bank. The economist said the regulator’s actions were without consideration because he has invested as much as $7.5 million in maintaining operating costs over the past 2 years.

Many people on Twitter believe Schiff is being served a dose of what pushed many people to embrace decentralization and Bitcoin (BTC). As a prominent critic of all Bitcoin represents, many are admonishing Schiff to shun his pride and adopt a system that governments can seize or close up irrespective of their reach.

Image source: Shutterstock


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Economist Peter Schiff Calls Bitcoin An ‘Imaginary Friend’ In Response To Jack Dorsey’s Hyperinflation Tweet

Peter Schiff is an economist, gold advocate, and one of Bitcoin’s biggest critics. He has never liked the digital currency.

He believes that real value is derived from an asset’s ability to create commercial demand in markets; and always refers to gold as a perfect example of this. In contrast, he says that Bitcoin is nothing but an asymmetric store of value with no other use except attracting an endless supply of buyers for the limited supply of assets. In short, it is a Ponzi scheme. However, he has been proven wrong over and over again.

In his most recent critique of Bitcoin, Schiff said it is not a real asset. This was in response to a tweet by Twitter CEO Jack Dorsey about the possible arrival of hyperinflation in the U.S. soon.

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Schiff Responds To Dorsey

On Saturday, October 23, Jack Dorsey shared his opinion on the current economic situation in the U.S on Twitter. He tweeted about the imminent hyperinflation as a result of the constant money printing in the U.S., and how the rest of the world would suffer from it.

Related Reading | Is Hyperinflation Inevitable? Jack Dorsey Says It’ll “Change Everything”

In response, Schiff tweeted that people should not look to Bitcoin to save them because it is not a real asset. Instead, they should own real assets like gold.

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Another Twitter user commented that Bitcoin is, in fact, real. And that it has just surpassed the Swiss Franc in Market cap. At this point, Schiff replied, calling the cryptocurrency a “make-believe asset” and that it is the adult version of an imaginary friend.

Peter Schiff’s Grudge with Bitcoin

According to this Wikipedia profile, Peter Schiff is an American stockbroker, financial commentator, and radio personality. He is also CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut. Additionally, he is involved in various roles in other financial services companies, including Euro Pacific Asset Management, an independent investment advisor, Schiff Gold (formerly Euro Pacific Precious Metals), a precious metals dealer, and Euro Pacific Bank, a full-reserve bank.

In addition to all these, Schiff is known for something else – his grudge with Bitcoin. He has always claimed its value will one day drop to nothing.

Earlier this year, Mark Cuban told Schiff to “move on” because “gold is dead.” In Response Schiff said, “Mark, a lot of your athletes wear gold jewelry. Ask them why. Gold has many uses outside of jewelry that contributes to its value as a metal. It’s not hyped at all. Gold is money. Bitcoin is 100% hype. It’s nothing.”

Related Reading | Mark Cuban Slams Peter Schiff: Gold is Dead, Bitcoin and Ethereum Are Today

Cuban himself used to be a bitcoin skeptic, preferring bananas to bitcoin because he claimed he could at least eat a banana.

In an interview on Good Evening San Diego a few days ago, Schiff referred to Bitcoin as a fool’s gold and a digital pyramid scheme. He also said that the SEC should not be encouraging people to participate.

BTCUSD Chart on TradingView.com

BTCUSD Chart on TradingView.com

BTC trading at over $62K | Source: BTCUSD on TradingView.com

When asked about the SEC’s recent approval of Bitcoin ETFs, he responded that “we should get rid of the SEC”.

He continued by saying, “I have no problem with the ETF itself, but if the SEC is pretending that it is some kind of watchdog and trying to make sure that investors don’t get hurt, then it makes no sense that they would approve this ETF because ultimately, the ETF is going to collapse to zero and the people who are left holding the bag are going to get wiped out.”

Schiff is also not impressed with futures ETFs. He says, “instead of owning nothing, you own a futures contract to gamble on nothing.”

Featured image by Bloomberg, Chart from TradingView.com


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The Bitcoin Haters And Their Bitcoin Beef

“Disgusting and contrary to the interests of civilization”

“Of course I hate the bitcoin success. I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth. I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.” – Charlie Munger of Berkshire Hathaway.

Those were the words of ninety-seven year-old Charlie Munger, the vice-chairman of the investing giant Berkshire Hathaway, and the second-in-command to Warren Buffett.

Charlie Munger cgtn.com

Charlie Munger cgtn.com

Understandably, Munger and Buffett have amassed huge fortunes by investing in companies, by picking stocks. That they would have no need to buy cryptocurrencies is understandable. That they may not even clearly understand them is to be expected as well. But, “contrary to the interests of civilization?” Munger offers no clarification on what he means by that. And to the point that bitcoin is used by drug dealers and other criminals, yes it is. So is cash. In fact, in 2020 only an estimated 0.34% of all cryptocurrency transactions involved illicit activities. Also, criminal activities conducted through the traditional banking system amounted to 2-4% of global GDP, significantly more than with cryptocurrencies.

Another point Munger makes is that bitcoin is being used as a substitute for gold, and he doesn’t buy gold either, so why would he buy bitcoin? Fair enough, Berkshire is focused on companies that make profits and pay dividends. It really doesn’t, however, make this new digital technology “contrary to the interests of civilization.” Ouch.

“It’s probably rat poison squared.” – Warren Buffett, on Bitcoin.

Buffett, with Liz Claman youtube.com

Buffett, with Liz Claman youtube.com

That was Buffett’s response to Fox Business host Liz Claman when asked about bitcoin. Buffett’s sidekick Munger had previously referred to bitcoin as “rat poison.” Buffett’s opposition to bitcoin can probably be summed up in three points. First, he says that bitcoin has no unique value on its own. (Sounds like paper money, right?) He feels the only value in bitcoin is the hope that someone will be willing to pay you more for it in the future. (Sounds like stocks, a little bit.)

Next, the “Oracle of Omaha” feels that bitcoin has none of the properties of money and is not a store of value. As with any new technology, Bitcoin is gradually gaining traction, both as a means of exchange and is already accepted by thousands of merchants around the world. In addition, it is fast replacing Western Union as the fastest and cheapest money transmitter out there. As for a store of value, bitcoin has appreciated an average of 200% per year for 12 years. That’s quite a store of value, albeit with quite a bit of volatility. So, admittedly, it’s not for everyone.

Third, Buffett probably doesn’t fully understand bitcoin. To his credit, he doesn’t invest in things he doesn’t understand. He is focused on stocks and buying great companies and as such surely hasn’t gone down the Bitcoin rabbit hole like many of us have. That’s fine, he’s undoubtedly one of the greatest investors the world has ever known; his track record speaks for itself. “I don’t own any cryptocurrency and I never will,” Buffett has said.

Paul Krugman

Paul Krugman is a Nobel prize-winning economist and just happens to be the author of a 2013 op-ed in the New York Times entitled “Bitcoin is Evil.” He’s been taking shots at Bitcoin ever since.

Krugman feels that bitcoin doesn’t yet, after twelve years, play any role in normal economic activity. He, like other Bitcoin haters, feels that it’s the currency of drug dealers. “Because Bitcoin and its relatives haven’t managed to achieve any meaningful economic role, what happens to their value is basically irrelevant to those of us not playing the crypto game,” said Krugman in a recent New York Times piece.

He’s also down on gold, for many of the same reasons, so Bitcoiners needn’t feel picked on. He feels gold can’t be used for monetary transactions and hasn’t been a stable store of value.

But, this early in Bitcoin’s existence, should you take Krugman’s words as gospel? Has he ever been wrong before? Here’s a quote from Paul Krugman, circa 1998. You be the judge:

“The growth of the Internet will slow drastically. By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.” – Paul Krugman, 1998.

Paul Krugman Politico photo

Paul Krugman Politico photo

Peter Schiff

Ah, Peter Schiff, the bitcoin bear and gold proponent that Bitcoiners love to hate. Schiff is the chief economist and strategist at Euro Pacific Capital and in his role he also manages Schiff Gold, the precious metals dealer. It’s no surprise that he is no fan of bitcoin, as many believe that bitcoin is akin to gold 2.0, and will become the leading store of value. Most Bitcoiners believe that bitcoin is actually better at being gold than gold is. I do like his views on the economy, inflation and money printing, however.

Peter Schiff hard-money.net

Peter Schiff hard-money.net

Schiff, after years of battling with Bitcoin maximalists on Twitter, has recently appeared on a lot of podcasts, debating Bitcoiners like Peter McCormack, Anthony Pompliano, Greg Foss, and Anthony Scaramucci. Interviewed on Fox Business by Charles Payne, Schiff said of Bitcoin, “All bitcoin is is the latest iteration of fool’s gold and anybody buying it is ultimately a fool.” Schiff feels that bitcoin will never be used as a store of value. He goes on to tell Payne:

“It’s never going to be money. It doesn’t fit the very definition of money. Money needs to be a commodity. It needs to have actual value unto itself, not just the uses and means of exchange.”

So Schiff feels bitcoin has no value unto itself and is backed by nothing. Sounds an awful lot like paper, fiat money.

I agree with Schiff in that gold has a place in certain portfolios. I also believe that dumping on Peter Schiff is not the best thing that Bitcoiners can do to promote mass adoption of cryptocurrencies. Further, I understand that he has motivation to throw shade on bitcoin, since his firm sells gold and silver.

It must really infuriate him, though, that his son Spenser Schiff is a very public and vocal bitcoin holder. Spencer went all in, putting 100% of his portfolio into bitcoin recently.

Ginsbergonomics: “Bitcoin Is Going To Suffer A Vicious And Painful Death”

The one-named writer, Ginsberg, publishing on Medium, made that the title of one of his recent articles, just a few weeks back. Sounds like he’s not a fan of bitcoin.

Ginsberg’s arguments against bitcoin are not grounded in fundamentals and in some cases are just plain wrong. Oh, his words are controversial, and that gets readers, I guess. His first take is that bitcoin isn’t just an asset, but rather a “religion.” He believes this leaves Bitcoiners blind to any criticism. He may have a point, but it doesn’t diminish the technology or uses of Bitcoin. It’s purely a side note.

Ginsberg states that the largest holders, the “whales,” are selling their bitcoin. That statement is too general, and data shows otherwise. While the number of whales has gone down, their aggregate holdings have gone up. Thanks to Will Clemente III and Glassnode for this chart. The green line denotes whales holdings rising:

Glassnode / @WClementeIII

Glassnode / @WClementeIII

Ginsberg also tries to make the case that institutional interest in bitcoin is “dead.” He calls the amounts of money flowing into bitcoin from institutions “pitiful.” That may depend on how you define “institution.” (Or how you define “pitiful.”) He says large corporations rarely buy bitcoin directly, so I guess that’s one definition, a large corporation. Publicly-held MicroStrategy (MSTR) has been buying bitcoin in a big way for a year and now holds 0.5% of all bitcoin in existence. Tesla has also purchased a substantial amount of bitcoin, over $2 billion worth. Square also holds Bitcoin on its balance sheet.

Fidelity Investments has been mining bitcoin since 2015 and has created a whole digital assets division, and J.P. Morgan is creating products to enable their clients to on-ramp into bitcoin. Mass Mutual Life Insurance has purchased $100 million of bitcoin. Ark Investing has invested in GBTC and Coinbase stock. Adoption is happening, albeit gradually. In addition to buying bitcoin directly, there are over a dozen applications on file with the SEC for approval to start a Bitcoin ETF. It seems like the institutional sector is jumping in, slowly, but with significant sums of capital.

Note – Ginsberg is putting his money where his mouth is. He’s got “skin in the game,” as he puts it. He is opening a $1,000 short position on Bitcoin at 10x leverage. You have to give him credit for that. And for keeping healthy discussion about Bitcoin alive.

This is a guest post by Rick Mulvey. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.


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Greg Foss And Peter McCormack Versus Peter Schiff On Bitcoin

The three compared and contrasted the merits of gold versus bitcoin in an interesting debate.

Podcaster Peter McCormack hosted a debate on September 10, 2021, between gold bug Peter Schiff and bitcoin strategist Greg Foss, discussing the value of bitcoin and gold, economic history, the importance of market prices, risk management and portfolio allocations. This informative and robust debate came from a clash between highly-knowledgeable combatants in the field of investing. The debate fell off the rails in areas that got technical and related to game theory. As mentioned in the debate, gold bugs and Bitcoiners likely agree on many economic issues. The clash however often comes down to the merits of gold versus bitcoin, but also the role of assets in portfolio construction.

The debate began to deteriorate once it was revealed that Peter Schiff didn’t know about the Bitcoin network difficulty adjustment, nor how it regulates mining activity. Schiff claimed that if the price of bitcoin was to double, the amount of bitcoin mined would increase because miners would devote more energy to mining bitcoin. After Peter McCormack informed him of the difficulty adjustment, Schiff pivoted to questioning what would happen if the price of bitcoin crashed. Again, Peter Schiff discovered the difficulty adjustment would stabilize any drops in hash power and mining rate.

Shortly after this revelation, he stumbled again on the supply cap discussion incorrectly claiming that miners can collude to increase the overall supply cap (addressed here). Additionally, Schiff claimed that miners tax bitcoin users, a false claim he has used in other debates and has been publicly corrected on before. After his bold proclamations crashed into the wall of reality, the pace of interruptions and ad hominem attacks accelerated. Honest debaters engage each other for the pursuit of truth. But instead of acknowledging his flawed comments, Schiff pivoted to attack elsewhere.

The liveliest part of the debate centered around portfolio construction. As a professional portfolio manager this was informative, entertaining, and filled with shocking comments. Greg Foss fired a shot across the bow claiming Peter Schiff was a horrible risk manager based on his record, to which Peter Schiff replied he “doesn’t care.” As a fiduciary, Schiff has a duty to properly manage risk, and could have also countered Foss’s claims if he had a successful track record of risk-adjusted returns. See for yourself at his website.

Often debates stall out because the definitions of terms are not predetermined, and individuals talk past each other. An example would be a commodity, which, as defined by Peter Schiff only includes analogues or raw materials. Bitcoin is dismissed by Schiff as a form of money because it is not a commodity. However, the U.S. Commodity Futures Trading Commission defines Bitcoin as a commodity.

Peter Schiff’s view is that a successful cryptocurrency can only be backed by gold or another asset. He claims this by saying that because these other assets are not volatile, don’t swing around, and aren’t dependent on someone else buying it, which means it isn’t a Ponzi scheme. Peter Schiff fails to mention that gold is highly volatile, prone to drawdowns and decade-long and more secular bear markets. Between January, 1980, and April, 2001, gold suffered a nearly 66% drawdown from its peak to trough. It took almost 30 years for investors to break even during that secular bear market. In light of the discussion of a physical asset backing a digital currency, please see the Oracle problem.

Ultimately, debaters often walk away believing they have won. In this case I believe those listening from the gold side won this debate. Why? Gold bugs may have finally caught onto the fact that Peter Schiff has a severe lack of technical knowledge on the asset he is so against!

For those scoring at home, I tracked five ad hominem attacks by Peter Schiff, and none for either Greg Foss or Peter McCormack. I counted 17 interruptions by Schiff during others’ designated talking time, but only two interruptions by Greg Foss, and five by Peter McCormack. As I noted above there was a notable shift in demeanor and respectfulness after Peter Schiff’s multiple technical blunders.

My Proof of Work is linked here, with detailed notes and summaries on the exchanges.

This is a guest post by Bitcoin&Bald. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.


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‘Extreme fear’ as Bitcoin falls below $40K … and then bounces

The price of Bitcoin has slumped below $40,000 for the first time in six weeks.

The slide took place near the close of the day on Sept. 21, with BTC prices having drawn down by 16% from nearly $47,300 at the start of the day, to tag a local low of $39,650 at roughly 9pm UTC. The move marked a 25% retracement from BTC’s local highs above $50,000 on Sept. 7.

However, the pullback comes after Bitcoin gained more than 80% since hitting $29,300 on July 20 and then heading into early-September’s highs. Bitcoin has since recovered to trade just above $42,000.

Bitcoin was not alone in suffering a sharp price decline on Sept. 21, with 29 of the top 30 crypto assets by market cap suffering a 24-hour drawdown according to CoinGecko.

According to the crypto Fear & Greed Index, the bearish price action coincides with sentiment of “extreme fear” across the market. Just one month ago, the metric signaled “extreme greed.”

Some of crypto’s outspoken critics have seized on the dip to offer apocalyptic predictions for the markets, with “Mr. Whale” proclaiming to his 300,000 Twitter followers that “the bear market is here.”

Notorious gold shill Peter Schiff chimed in, forecasting that the growth of altcoins will soon “overwhelm demand” until “the crypto bubble pops, while Bitfinexed believes the credit woes of Chinese real estate giant Evergrande will threaten Tether’s reserves and the broader crypto markets through systemic risk.

The price plunge also came in the aftermath of SEC chairman Gary Gensler likening stablecoins to poker chips and calling for tightening regulation of the sector.

However, much of Crypto Twitter reports zealous dip-buying in response to the market action, with some analysts asserting Bitcoin is poised for a recovery should prices hold above local support.

Galaxy Digital CEO Mike Novogratz appeared on CNBC to offer that he won’t be feeling “nervous” unless BTC fails to hold above $40,000 and Ether crashes below $2,800. “As long as those [price levels] hold, I think the market’s in good shape,” he added.“

Novogratz is not alone in eying the roughly $40,000 level as a critical support zone for BTC, with popular analyst William Clemente III recently asserting that Bitcoin is unlikely to fall below $39,000 due to its liquid supply floor and “real-time scarcity.”

Related: Ethereum forming a double top? ETH price loses 12.5% amid Evergrande contagion fears

Looking toward the fourth-quarter, influencer Lark Davis notes that the final quarter of both 2013 and 2017 saw rallies of more than 300% respectively as past bull cycles crescendoed, and speculated the possible approval of a Bitcoin exchange-traded fund (ETF) in the United States could again send prices flying.