Jeffrey Tucker Senior fellow at Foundation for Economic Education, CEO of Liberty.me and founder of the Cryptocurrency Conference discusses Bitcoin price fluctuations and investment psychology. He gives an analysis on Peter Schiff many objections to Bitcoin. He then goes on to explain the impact that Bitcoin itself has had on allowing Liberty to grow worldwide.
Kurt Wallace: We have a very special guest with us today on Rare – Jeffrey Tucker. He is the CEO of Liberty.me. He’s a Distinguished Fellow at the Foundation of Economic Education (FEE), and the Executive Editor of Laissez-Faire Books. Jeffrey, it’s good to have you with us today.
Jeffrey Tucker: Kurt, it’s really nice to talk to you. We haven’t talked since I guess we left Dallas together at that great event we attended recently.
Kurt Wallace: That’s right, that’s right. And when we were heading out to Dallas, you were looking at your phone and you were looking at the price of Bitcoin. And I believe at the time it was like, $120 a coin, and then it went up to $200 and something, and over those couple of days we were at the event, I think maybe it was at $400? It was crazy!
Jeffrey Tucker: It was crazy. And then the crest had peaked at something like $1250, you know, and Bitcoin is so funny because when it’s going up, everybody’s all frenzied. And then it took a tumble over the last several days, and once again, you know, it just like a rhythm of time or something. People go “Oh god! Bitcoin is dead.” Because Bitcoin, you know, attached $550 or $500, or something like that. Everybody forgets that last month this time, it was $100, haha.
Kurt Wallace: It’s the craziest thing. Before your Crypto-Currency conference back in October, it was $85 after Silk Road, so it’s gone up to, uh, people said it crashed when it was at $850. But that’s just a ridiculous amount of profit from $85 over a couple of months.
Jeffrey Tucker: Yeah, and we’ve seen this funny pattern where – and which is not to say it’s going to repeat – but there does seem to be a pattern of a kind of run-up and a slight pull-back, followed by a run-up that looks sustainable. And then it tricks people, and then it tricks people and immediately you see a fall of 40% or something like that. This has happened 3, 4, 5 times in the history of Bitcoin, which is not a whole lot of time, actually, because Bitcoin is only about 5 years old. But we keep seeing this pattern. And I think – I’m just guessing, I’m probably wrong – I’m guessing that we’ve reached where Bitcoin will never go lower than it is right now. And the next peak will be closer to $1700 to $2000, or something like that. And then it’ll seem sustainable, and then it will roll back again to $1000, $1100, something like that. And once again, everyone will declare Bitcoin dead. It’ll just kind of go like this. And I’m fully expecting by next fall we’re going to see prices in the $5K range. That’s my guess.
Kurt Wallace: I had interviewed Congressman Ron Paul at one point, and I suggested at one point that he was able to predict economic fluctuations. He said “Well, I’m not in the job of predicting, but there are certain rules to economics.” And I’m kind of wondering from your standpoint and expertise, is there a way to understand how Bitcoin works? Or is it just human behavior? How does this all fluctuate when we talk about the price of something like this?
Jeffrey Tucker: I don’t think that you can say that there are any kind of fixed rules about these things. But what you do have is a series of technical indicators and specialists, and markets observe these things, you know, almost like a kind of repeated pattern that, you’re probably right, are an extension of market psychology, about human behavior. One thing that’s interesting – everybody says buy low, sell high, right? But the problem is, you never know whether it’s low or it’s high. This is true for anything – pork bellies, or corn, or gold, or houses, or Bitcoin. You don’t know at any single moment, are we low or are we high? You just don’t know. But what happens is, psychologically, people get excited about something when it’s going up in price. It draws their attention, it attracts their interest. That’s when they intend to buy. And then, when things fall in price, they lose interest, get sad, or whatever. And then, sure enough, that’s when people tend to sell. So, it’s a fairly amusing thing. They do the exact opposite of what they should do. If you want to beat the markets, which is very difficult to do, what you have to do is get interested in something when nobody else seems to be. And when everybody else is really interested in something, try to become less interested in it. Try to look the other way. That’s your best hope at beating the markets. You have to contrarian to mainstream opinion if you want to profit.
Kurt Wallace: That’s very interesting. Now, Peter Schiff has been questioning Bitcoin as just another fiat currency and he’s said a few things that are related to gold, or trying to tie Bitcoin to gold. But the real essence of Bitcoin isn’t the fact that it’s just a currency, it’s also the tool itself – the system itself. Is that correct?
Jeffrey Tucker: Yeah. I’ve listened to enough of Peter Schiff’s comments on Bitcoin to kind of get the hang of what he is. I mean, he has something like 50 different objections to Bitcoin, but not one of which is decisive. Even in his own mind. And what you can tell is emerging out of all of that sort of flurry of questions is essentially a confusion about what Bitcoin is and what it does, and why it’s valuable. I think you make a really good point, and I’ve heard people argue this before – somebody like Eric – where he says this: The real value of Bitcoin is the payment network itself. He says that this is the underlying value of Bitcoin – its amazing payment system. I haven’t really heard it put that way before. I read him say it recently, but I think there’s something to that because there’s just nothing like it. Just in the last two days, I had a friend who had a birthday and really wanted to get a computer for her birthday, and kind of crowdfunded her little shopping trip. Haha, and it was so easy. She put up her Bitcoin address. I was on my way out the door so I was able to shoot her Bitcoin, I think about $200 worth, in less than three seconds at zero transaction cost. You can’t do that with dollars. You can’t do that with any national money. And it went from me to her, and this transaction was completed in probably ten seconds. That’s just inconceivable in the world of dollars to exchange electronic money, but through a third-party trust relationship, but actually having the money go from me to somebody else electronically will take 3 to 4 business days and cost anywhere from 3 to 6 to 8 percent of the transaction. The same thing happened the other day. I had a friend get into some legal trouble and needed some help with some legal bills. I wanted to throw a contribution her way, and it was just easy. Just copy the Bitcoin address, put it into my Coin Base, off it went, the money was there. So these kinds of things just can’t be replicated in the world of dollars. It’s an amazing payment system. This combination of open-sourced software (peer-to-peer), currency exchange, cryptography, a ledger that lives on a distributed network, these things are amazing – this perfect combination of ones and zeros – to reinvent the world financial system.
Kurt Wallace: How does Liberty.me cover things like Bitcoin, economics, and…
Jeffrey Tucker: Kurt, let me kind of explain this just a little bit, because part of the whole point of Liberty.me is that we needed our own little civilization of crowdsourcing solutions to liberty. By solutions to liberty, what I mean is that I want to take liberty out of the realm of pure theory and put it into practice because I have experienced in my own life the ways in which this truly does work. It’s a big step to go from just believing in something as some sort of ideal and committing yourself to it, and actually implementing it in your life and seeing how specifically it improves your life and makes your life better. I had two huge experiences in the last five years that changed my mind on this whole topic. I used to think it was enough just to kind of believe and hope for human liberty at some point in the future. But, I started to study the subject of intellectual property, and I began to see the problems of its implementation and I decided to experiment slightly and rejecting it as a publishing model. I started using creative comments, which is a much more free-market solution. It was at that point that I began to see how embracing freedom through specific steps you take in your life can actually make your life and your efforts more effective. My publishing model was way more effective without the use of intellectual property than it was with it. So, that was an example of my first really big case at how taking the theory of liberty into the practice of liberty with the capability of making the world a better place, if you see what I mean. That was a big step for me, because to understand the things we can do in our lives to improve our own lives and the world around us is kind of a big discovery. Bitcoin was the next one. So after I had gone through this whole intellectual transformation over intellectual property, suddenly statician Nakomoto comes out with this protocol. Now, he never asked anybody’s permission. He just threw it out on a distributed network and said “Here’s my money. See if you like it. If you like it, use it and see what happens.” Well, sure enough, it’s taken off globally, and vastly enhanced freedom already for millions – if not billions – of people around the world. This was something that, again, he didn’t wait for any government permission to do this. He didn’t wait for some big policy change or go begging to any regulatory agencies and say, “Can you please approve my new currency?” or whatever. He didn’t ask for a change of the existing system. All he did was, he worked around it. He invented a solution to a real problem, and it’s changing lives. So, these are two really strong examples, and it’s precisely because I want to see more of that sort of thing, that I put together Liberty.me as a space for liberty-minded people to come together and share ideas to make their own lives freer, and it covers every subject from education to travel, and immigration, and entrepreneurship, independent living in urban communities, dealing with cops, health and diet even. There’s no aspect of life that I want to be untouched ideation of liberty. I think we’ve forgotten what liberty is. We’ve come out of a century of despotism, essentially, and if we’re going to make a new world, we have to take specific steps in our lives to make that happen. That’s why Liberty.me exists. I didn’t see any other space on the internet, or anywhere, that’s totally dedicated to this task. So that’s why I founded the company, and that’s what I’ve been working on for three months. I just put up my little crowdfunding campaign yesterday, and I’m staring at it right now and amazed to see that we’re up $40K in 24 hours!
Kurt Wallace: That’s fantastic!
Jeffrey Tucker: I think we’re meeting the need. There’s something – I think we’ve touched a nerve. This is important. This is an important idea.