Finance Magnates interview with Jeff Berwick, by Michael Pearl:

Money, in its various forms and modifications, is at the core of the argument between socialists and capitalists, between libertarians and authoritarians, and so on.

Ayn Rand, the Jewish-American Philosopher and writer, and the guru of many economical liberals had a very specific definition of money in her book Philosophy: Who Needs It?: “Money is not merely a tool of exchange: much more importantly, it is a tool of saving, which permits delayed consumption and buys time for future production. To fulfill this requirement, money has to be some material commodity which is imperishable, rare, homogeneous, easily stored, not subject to wide fluctuations of value, and always in demand among those you trade with.”

The current form of money we hold in our pockets or bank accounts doesn’t really fulfill those requirements. Many libertarians have voiced their discontent with the current monetary system and the institutions – governmental or private – that are processing our money.

Some are claiming that fiat money is virtually worthless, given it has no intrinsic value – thus its price is subdued to extreme volatility and even a total collapse. Other claims are focusing on the limitations on storing, moving, and spending our money.

Several libertarian-leaning economists, reminisce on the good old gold-standard days, when money was money and value was value. Keith Weiner, the president of the Gold Standard Institute USA, and CEO of Monetary Metals, as well as the CEO of Euro Pacific Capital Peter Schiff, for instance, believe that the answer is either physical gold or gold-based financial products.

Digital Gold

Others, see comfort in cryptocurrency. It is no wonder that cryptocurrency, which is often referred to as ‘digital gold,’ was a breath of fresh air for the libertarian community. Presumably, this new decentralized and anonymized monetary system is the ultimate solution to fiat’s shortcomings.

“In five years, if you try to use fiat currency they will laugh at you,” said crypto entrepreneur Tim Draper during the 2017 Forbes Websummit conference. “Bitcoin and other cryptocurrencies will be so relevant, there will be no reason to have the fiat currencies.”

However, as regulators sink their teeth into the crypto firms, and as the industry becomes more consolidated around a small number of players, this dream seems to be overshadowed by reality.

Optimistic Anarchist

Finance Magnates sat down with the Canadian anarcho-capitalist Jeff Berwick during the Israeli Bitcoin Summit that was held at the Tel Aviv University, to examine whether cryptocurrency should still be considered the libertarian panacea.

“Bitcoin has changed quite a bit over the last few years and it’s been regulated. However, it still is a currency totally outside of the control of central banks or governments. That truly is a libertarian dream,” says Berwick, who also founded the well-known blog The Dollar Vigilante.

“Our money is government controlled, central bank printed… all these sort of communist ideas. So, in this reality, to have a currency that is really limited in supply and that can be transferred very easily, for a very low cost and quite quickly – is indeed a gamechanger.”

Berwick believes that most of Bitcoin’s problems are temporary and will change in time. “We are still in a very early stage. It’s pretty much like the internet in 1996 – an idea that people are catching on to but most don’t really know what this is. Once even 1% of the world population gets cryptocurrency gets into cryptocurrency – the market will explode.”

Safe Haven

As the discussion around a possible market crash intensifies, many view cryptocurrency as the safe haven for investors when all hell breaks loose. Nick Szabo even suggested recently that central banks will soon trade physical gold reserves for cryptocurrency. Berwick believes that we are indeed headed for “a major market crash that will be worse than all that we’ve seen before.”

In his view, the only assets that will survive in this crisis and in its aftermath are precious metals and cryptocurrencies. And given that it is quite difficult to transact with gold and move it around the world, he believes crypto will take precedence. “You can send a billion dollars in just minutes to China with a click of a button – no questions asked. That will definitely be of value in such a chaotic situation.”

No CEO for Bitcoin

According to Berwick, Bitcoin’s advantages, like decentralization, are also its disadvantages when it comes to scaling and expanding. “Bitcoin doesn’t have a marketing department – there are no TV ads or on-site banners. It doesn’t have a CEO or CMO. It’s a market-driven product. However, like every good idea it will eventually catch on.”

He compares the cryptocurrency to Uber’s business model. “People have been using it for almost 10 years because the product was good – even without proper marketing. Bitcoin is still not there.”

National Digital Currencies Will Boost Decentralized Currencies

Berwick believes that in the near future, many governments will start issuing national cryptocurrencies. “This is very good news for the crypto industry. Once the regular people start using digital currencies, it will be much easier to move to a better – more decentralized – cryptocurrency.”

He explains that national currencies will harness all the benefits of blockchain, such as the accuracy and trustworthiness of the ledger, to use it for their own good. “This will only increase government’s control of our money. Now it will be easier for them to tax you or track where you move your money, not to mention them keeping their ability to ‘print money’,” says Berwick, whose LinkedIn tagline says “Freedom Fighter Against Mankind’s Two Biggest Enemies: The State & The Central Banks”,

This process will prompt the ‘ordinary people’ to become both aware of the problems in their national currencies and more crypto-savvy. It is then, he believes, that the masses will start shifting to Bitcoin and other cryptocurrencies in droves.

Anonymity is of the essence

Despite his keenness on Bitcoin, Berwick acknowledges the shortcomings of the currency. “When Bitcoin first came on, a lot of us [libertarians] thought it was anonymous. But we realized along the years that it’s not at all anonymous. A lot of governments have figured this out and are using that.”

The lack of anonymity and privacy is one of the main issues that crypto developers need to tackle in order for the industry to scale and evolve. Therefore, Berwick is closely tracking privacy oriented currencies, such as Monero. “That’s the hope in the future for us.”

[Originally published by Michael Pearl at Finance Magnates]