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Peter Schiff Attacks Bitcoin Consensus Algorithm

One of the most prominent skeptics of Bitcoin is Peter Schiff. Several times this year, the gold bug has criticized the leading cryptocurrency, bashing it repeatedly amidst a price rally. Bitcoin became Schiff’s target once again, as he took to Twitter to state that the underpinning technology of the crypto itself is just nonsense. He took a dig at blockchain technology and highlighted that the primary consensus mechanism of the concept was useless. It appeared that the investor was angry about the proof-of-work (PoW) mechanism and explained that it rewarded miners while focusing on the wrong metric. Schiff is not known to be succinct when it comes to criticizing crypto.

He stated that the concept of Bitcoin’s value is determined from past work requiring the validation of information that’s encoded on the blockchain is utterly useless. He compared it to digging a hole and then filling it up again with dirt. According to Schiff, any effort is worthless if it doesn’t produce any value. Like every other thing he has said before, this tweet also drew a lot of reactions. Chainstone Labs’ managing director, Bruce Fenton said that the investor was missing something else. Fenton claimed that if Bitcoin’s whole value was just based on PoW, it would have failed, similar to other assets that are running on this mechanism.

However, the fact that the pioneer crypto is successful is mostly because it doesn’t just depend on its consensus mechanism for deriving its value. Another Twitter user said that miners working on the Bitcoin network deliver real value, depending on their transaction confirmation tasks. Therefore, they deserved to receive rewards for their work. As stated earlier, Schiff criticizing Bitcoin is nothing new. The trader and investor is recognized as one of the top detractors of Bitcoin, including people like Nouriel Roubini. He had attacked the digital asset just last month by calling it the biggest bubble ever. 

He said that considering the level of conviction traders have, the digital asset should be regarded as the most gigantic financial bubble. The investor said that as opposed to house buyers and dotcom, Bitcoin holders seem to be a lot more confident in their bubble. This tweet came as Bitcoin rose against gold to reach historic levels. At the time, CoinGecko had provided data, which showed the BTC/XAU trading to 7 ounces against 1 Bitcoin on 25th, October. One of the many advantages that Bitcoin has had, as opposed to gold, is its apparent disassociation with the US dollar.

The precious metal is linked to the dollar, and the global reserve currency has been on a downward spiral due to the coronavirus pandemic, which means gold has gone down with it. The last time Bitcoin had broken the 7 ounce mark was back in September 2019. A quant analyst, PlanB referred to the latest development as a ‘significant’ one and it is expected that Bitcoin just might capture a major portion of gold’s market capitalization. It appears that the leading crypto is on schedule to end another year with much better returns than gold.

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