Saylor: Diversification ‘Makes No Sense’ in Bitcoin vs Gold Debate

Cryptocurrency proponents have long touted bitcoin as “digital gold,” but Frank Giustra maintains nothing will replace physical gold, in a debate with Michael Saylor.

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key takeaways

key takeaways

  • Michael Saylor debated Fiore CEO Frank Giustra this week about the merits of bitcoin versus gold as a store of value
  • Giustra, skeptical that bitcoin could replace gold anytime soon, also argued in favor of its long-term value; whereas Saylor held a much more pro-bitcoin stance

Cryptocurrency proponents have long touted bitcoin as “digital gold,” but skeptics maintain that nothing will replace the timeless store of value anytime soon. 

In classic traditional finance-versus-crypto fashion, Michael Saylor, bitcoin bull and CEO of Microstrategy, faced off with Frank Giustra, mining financier and CEO of Fiore Group, during a two-hour debate hosted by Stansberry Research Wednesday.  

Saylor, who made headlines last year for becoming the first CEO of a publicly-listed company to convert a portion of cash reserves into bitcoin, argued that bitcoin’s inherent attributes make it essential. It’s divisible, cannot be counterfeited or confiscated and is easily distributable. That makes it a modern store of value in today’s economic landscape, he said, whereas gold is more dated.

“Without delivering effective money to the human race, everyone is going to economically freeze,” said Saylor. “Gold is not a solution, it is not practical to distribute gold in small quantities to five billion people, but bitcoin is a solution.”

Because of bitcoin’s digital nature, people can buy, hold and move fractional amounts of bitcoin.

Further, Saylor added, gold “makes great jewelry, it makes a great ornament, [but] it’s just not a perfect monetary asset because you can inflate gold, you can confiscate gold, you can counterfeit it. Bitcoin is not just an asset, it’s a network and it’s a protocol.” 

A different kind of asset 

Giustra, an investment banker by trade, said Saylor’s “mission” for all gold holders to sell and invest in bitcoin is unrealistic and self-serving, but he agreed bitcoin is not to be dismissed and that “it’s here to stay.” It just doesn’t function as a good safe-haven asset yet, he said.

“I think there is a good chance it never will,” Giustra said, adding that bitcoin is too volatile, not regulated enough and not secure enough to ever take over gold.

“You’re trying to create a narrative for a higher price for bitcoin,” Giustra said to Saylor. “In order to do that, you need to convince everyone out there that gold is worthless and all of that value that currently resides in gold, all $12 trillion dollars of it, should be transferred to bitcoin.” 

Further, regulatory crackdowns are likely to pose a challenge for digital currencies, Giustra said. Crypto proponents tend to downplay the risks associated with the asset class, and beyond that, the community can be intimidating. 

“I don’t like the style in which social media is being used to bully critics,” said Giustra. “The gimmicks and slogans, like the laser eyes, cyber hornets, and ‘have fun staying poor,’ all this stuff to me smells like a cult, a cult behavior.” 

Diversify, diversify, diversify

Giustra emphasized that choosing between gold and bitcoin does not have to be a binary choice because the assets have different purposes. He closed with a pitch for portfolio diversification. 

“You never put your eggs in one basket. My suggestion to investors is to diversify a portfolio,” said Giustra. “Include real estate, gold, art, and bitcoin if you like. Buy bitcoin, knock yourself out, it probably will go higher, I’ve said that before. But the best strategy might be if you are going to buy bitcoin, hedge it with gold because that is gold’s purpose.”

Saylor maintained his all-or-nothing view. Bitcoin offers solutions that gold will never be able to, he said. 

“Diversification makes no sense when there’s a cracked answer to an engineering problem,” said Saylor. “Money is a winner-take-all competition. There is an answer. Choosing the wrong answer has dire consequences.”

Saylor also noted that historically, currency has always evolved. The next step for money, he said, is digitization; and just as society has advanced its infrastructure, technology and energy, it is time to evolve the financial systems as well. 

“The time has come to pass the torch from gold to bitcoin,” said Saylor. 

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