Summary Of The Best Debate At Surfin' Bitcoin

The verbal showdown between economist Jean-Marc Daniel and Tobam founder and president Yves Choueifaty was one of the highlights at the Surfin’ Bitcoin conference. Here is a summary of this enlightening exchange.

“The Currency War: Bitcoin vs. Currencies”

The two contenders began the debate by discussing competitive monetary devaluations.

Yves Choueifaty summarized it by explaining that it involves “lowering the value of your currency in order to discourage imports and encourage exports. The problem is that your neighbor will start doing the same thing. You end up with a currency war, which ultimately destroys value. In the end, only the disadvantages of monetary devaluation remain.”

For him, a third currency has entered this war: Bitcoin.

Here is a link to the debate:

"La guerre des monnaies : Bitcoin face aux devises" 🪙

Nous étions à @SurfinBitcoin pour une table ronde animée par @adetonquedec avec Jean-Marc Daniel et Yves Choueifaty

à (re)voir sur notre site ou sur youtube 👇https://t.co/KEQ1Xe5Pyz pic.twitter.com/AkUqgbUrh8

— BFM Crypto (@BfmCrypto) September 3, 2024

Jean-Marc Daniel set the scene by noting that the move to floating exchange rates (ending the Bretton Woods agreements in 1971) did not resolve the global payment imbalance issues. The enormous trade deficit of the United States is problematic.

Indeed, since the dollar is the international reserve currency, Americans can borrow with impunity and run a chronic trade deficit without the greenback collapsing.

Unfortunately, the conversation quickly veered away from this crucial fact. A shame. Nevertheless, the discussion that followed was very interesting. The two speakers wondered if, in the end, Bitcoin can really replace fiat currency.

Jean-Marc Daniel doesn’t believe so. The BFM TV columnist hammered home that the initial project – replacing central banks with Bitcoin – is no longer taken seriously.

Your humble servant agrees. Saying otherwise is foolish. This false hope is propagated by essayist Saifedean Ammous and Austrian school economists. Our article on the subject: “Austrian economists hinder Bitcoin adoption”.

How to Protect Against Inflation?

Jean-Marc Daniel prefers to rely on the tried and true formula of globalization to keep inflation at bay. However, it quickly forgets that inflation was terrible over the past three years.

Not to mention the geopolitical and energy tensions that rather point towards deglobalization. Let’s not forget that the peak in conventional oil in 2006 was the root cause of the 2008 crisis. Inflation (and/or recession) would have been much worse without the “miracle” of American shale oil.

Oil is THE limiting factor in the economy since it fuels 95% of global transport. Unfortunately (or fortunately, depending on your view), global oil production has not increased for five years. The decline is in sight. Less oil = less transport = less production = more inflation.

Can Bitcoin do anything about it? No. Replacing fiat currency with Bitcoin won’t magically make oil appear. Even Yves Choueifaty conceded that he doesn’t see Bitcoin entirely replacing fiat currency:

“Whether we call Bitcoin a currency or not, I consider it a detail. We can concede that it’s not a currency. But we cannot deny that it is an asset with a very strong legal reality in the United States.”

You can’t taper a ponzi

For Jean-Marc Daniel, Bitcoin won’t impose monetary discipline on states either:

“Bitcoin is not yet perceived and perceivable as something that can structure a dynamic of commercial exchange and monetary and financial discipline.” “In my opinion, the real challenge of the economy is to create savings. With the idea that, behind it, there is a dynamic of long-term investment. It’s about forming capital that leads to productive work, which is not the case with Bitcoin… Gold and Bitcoin have no social utility. Savings should rather be invested in stocks.”, he said.

This argument doesn’t hold water. Fiat currency invested in Bitcoin doesn’t disappear… It simply changes banks. Even if Bitcoin were worth $100 trillion, it wouldn’t change the fiat system’s ability to finance the economy. Rather than paying dividends to investors, multinationals would simply pay interest to banks.

Then there is the role of the store of value. Yves Choueifaty and Jean-Marc Daniel agreed that Bitcoin is like gold. Better for one, worse for the other.

Here are the three arguments our opponent advanced in favor of gold:

1)“Any technology is threatened. Gold is not physically threatened. Gold exists, it is there. It cannot disappear.”
2) “Gold has proven itself for 7,000 years. There will always be someone to buy it from you.”
3) “Buying a Louis d’or is accessible, not a Bitcoin.”

Bad faith or ignorance of Bitcoin?

It is, of course, possible to buy a fraction of a Bitcoin. This is its great advantage over traditional stores of value like real estate and art. You have to be already wealthy to buy a prestige apartment in a capital city while anyone can buy 20 euros worth of Bitcoin. Bitcoin is the store of value for the poor.

The digital existence of Bitcoin offers three major advantages over gold. The first is the ability to cross borders with all your wealth in your head. Just memorize 12 words.

The second is to transfer any amount instantly to the other side of the world for next to nothing.

The third is that an absolute limit (21 million bitcoins) is only possible in cyberspace. 94% of bitcoins already exist. Conversely, more than 3,000 tons of gold are mined each year.

To sum up, the theory that Bitcoin can replace fiat currency has taken a hit. The debt tool is indispensable for any advanced civilization. After all, the rules of the game are the same for everyone (except the United States…). Each nation is responsible for its finances, and so much the worse for those who think they can print their wealth.

Finally, even if Bitcoin does not have to replace fiat currency to succeed, it remains poised to replace the dollar as the international reserve currency.

It is also the simplest option for mass savings. Savings destroyed by increasingly acute inflationary crises. Don’t miss our article: “What Bitcoin Will and Will Not Be”