Gold Money CEO, Roy Sebag: “Investing in Bitcoin Is Worse Than Having Negative Yielding Bonds”
Gold bugs and Bitcoin bulls have been at each other in the past few years as Bitcoin (BTC) grows more and more as a challenger to gold as a reliable store of value. Gold’s long standing reign as the world’s favorite SoV is however not going to be challenged anytime soon, at least in value and mining status, according to Roy Sebag of Gold Money.
The chief executive at Gold Money spoke at length on the future prospects of Bitcoin, the flawed BTC mining system, the #DropGold campaign and why we need both Gold and Bitcoin. Sebag does not believe Bitcoin’s current value is justifiable despite the asset growing by 230% since the start of the year.
Roy Sebag, CEO of Gold Money speaks on Bitcoin and gold future prospects on Real Vision's: The Interview
“Negative Yield Bonds Are Better”
In an interview on Bitcoin and gold future prospects, Roy bashes Bitcoin as a system that spends billions of dollars from its annual earnings just to survive. He argues that the system take up almost $7.5 billion USD in electricity costs and equipment in a year (on the lower side), which could rise up to $10 billion USD annually, a 5% cost, considering a $200 billion market capitalization.
Further bashing the mining process of Bitcoin, the gold shill said the digital asset is far worse than a negative yield bond. He said,
“You have a monetary system, which is worth $220 billion, that’s costing about four to 5% a year just to perpetuate its own existence year over year. That, to me, is worse than any negative yielding building bond.”
Bitcoin mining pools destroying the system?
Bitcoin has faced a number of challenges in its quest to become a global currency and the recent transformation to become a “store of value” doesn’t ring well with Sebag’s opinions. He claims the very thought of Bitcoin being a store of value is flawed as it is not as decentralized as the fanatics claim it to be.
The total Bitcoin mining hash rate distribution in the past 48 hours (Image: Blockchain)
For instance, over 68% of the total BTC mining hash rate is shared across the five top mining pools showing the level of centralization on the project. He terms these mining pools as “organizations” that control the system as they decide whether to keep the system running depending on the incentive.
He claims that these miners are in control of the network as they sell the assets to the investors for cash. However, in the case that the incentives offered for the assets does not cut it, these miners will chose to switch networks leaving the chain in utter security shambles. He further says,
“So, if they’re not getting incentivized – the same way an executive isn’t getting paid to perform their function – they could argue. They have the bargaining power in this equation to essentially enforce that, at some point in the future, the person that bought a Bitcoin in the past has to pay more.”
Roy Sebag on Twitter: “Why we need both Gold and Bitcoin” (Source: Twitter/ @roysebag)
The BTC Mining Challenge Lies In Extreme Power of Mining Pools…
In August 2017, Bitcoin experienced its first major hard fork following calls by Bitmain’s owner Jihan Wu, to incentivize miners better. The move brought to life Bitcoin Cash (BCH) after Wu convinced a couple of mining pools to fork. Such events are common in the blockchain world which shows that miners are operating more or less like a price regulation committee.
Notwithstanding, the oligopoly that Bitcoin mining pools carry may cause a 51% attack on the chain which is a risk on investors. He said,
“And in the worst case, if we’re thinking about tail risks, you can get what you saw with Ethereum classic recently, where you get just a full on 51% attack, someone comes in and mines a bunch of fake blocks, and then you’ve got to fork it again.”
“The #DropGold campaign will not work”
[On the subject of #DropGold]
“You’ve got $300-400 Trillion of fiat denominated assets that can be targeted and they [Bitcoin evangelists] are sitting there trying to revolt against the father, attack gold. Gold doesn’t really care about any of this, it’s going to do just fine.”
Sebag points out correctly that despite the continued calls by Bitcoin bulls and fanatics to drop gold and pick Bitcoin, the dollar price of an ounce of gold has increased to levels not seen in 9 years. He reiterates to the Bitcoin investors to look at the asset’s economics keenly before attacking gold – which has proved itself through socio-economic and political boom and busts.
He further questions the fundamental aspects of Bitcoin stating,
“Where I’m more concerned about is Bitcoin’s future, because Bitcoin is, on the one hand, trying to align itself with the Keynesians, with the fiat money system, especially when it starts to attack gold, but on the other hand, isn’t addressing these fundamental design flaws.”
Bitcoin and Gold vs Fiat currency
Despite the criticism, Sebag believes that Bitcoin and gold should not be at loggerheads while the “real enemy” is the fiat currency systems. He believes the two assets are both working towards dethroning the unstable, systematic fiat system to replace it with a more resilient system backed by a real commodity.
He concludes saying,
“If I am to make one wager a few decades from now, when the story is written, the greatest contribution that Bitcoin will have made is accelerating the reversion back to precious metals.”