Bitcoin diehards and gold believers debate: Which is the better investment?

This week on CNBC's Fast Money show, financial market commentator Brian Kelly and gold supporter and economist Peter Schiff had a debate. The two financial experts discussed the investment value of Bitcoin and gold - which one is a better investment option?

Since its inception, Bitcoin has been a problem for gold believers. Economist Peter Schiff has repeatedly stated publicly over the past few years that Bitcoin has no real value. His debate with Brian Kelly did not offer any new ideas, and he still believes that Bitcoin is cheaper than a stuffed animal. However, CNBC's Kelly refuted his views, arguing that Bitcoin's value is determined by its practicality, and its availability is increasing as demand for Bitcoin increases worldwide. Kelly said that, like Bitcoin, the value of gold comes from subjective human definitions, and that gold is essentially just a "shining stone."

Kelly: Bitcoin is more than just digital gold

On the Fast Money show, the financial market news team focused on the investment advantages of Bitcoin and gold and compared the characteristics of the two.

Gold or Bitcoin, which one is a better choice?

The host asked this during the show.

Kelly explained:

To me, the obvious answer is Bitcoin.

Bitcoin is more than just digital gold. I think that’s what most people misunderstand about Bitcoin. Bitcoin is a technology platform, the foundation of financial technology. Like the Internet, it’s a once-in-a-generation investment opportunity that’s growing rapidly. I’m not the only one who holds a similar view. In fact, many people are already involved - the Federal Reserve just released a report and formed a working group; the Bank of England is also involved, and at least 14 of the top 30 banks in the UK have launched blockchain projects; JP Morgan, Goldman Sachs, CME and NYSE are all involved in Bitcoin’s underlying technology projects.

So let's say -- let's say we can put a value on Bitcoin, let's say none of that happens. Even with all the people that are starting to research and create use cases in the Bitcoin platform -- let's say Bitcoin is digital gold, and for some reason it only gets 1% of the market share of gold, then it would be priced at $4,500, and it's currently priced at $1,200. Let's say Bitcoin gets 5%, it would be priced at $22,000. That's a winning investment for me.

Schiff: Bitcoin is the digital fool's gold

As usual, gold believer Schiff appeared unfazed by the attitude of Bitcoin supporters. In fact, during the debate, Schiff said Kelly’s obsession with the digital currency was like a “cultist.”

Schiff countered:

I agree that Bitcoin is not digital gold, but digital fool's gold. Bitcoin today is like Beanie Babies. Essentially, Bitcoin is replicating the unique monetary properties of gold and the characteristics of a fiat alternative. But it cannot act as a real currency - I mean it is a medium of exchange, not a store of value. At the same time, no one really uses Bitcoin as a medium of exchange, only for speculation. People just hold Bitcoin because they think this asset will become more valuable in the future, but in fact it has no intrinsic value.

Kelly immediately refuted his point:

150,000 merchants around the world accept Bitcoin payments, including Edipay. The average daily transaction volume of Bitcoin is 300,000.

However, Schiff does not think that these merchants really accept digital currencies. He said it is just a "gimmick" and that these companies that accept Bitcoin are more concerned about US dollars or euros.

You are wrong. No merchants will accept Bitcoin. They just work with companies like Bitpay to actually accept USD. No merchants will price their products in Bitcoin. It is impossible and it is just a gimmick to package themselves.

People use Bitcoin to circumvent currency laws and transfer money out of China. No one uses Bitcoin in business. How about you find me a merchant that prices products in Bitcoin? They only price in dollars or euros. Bitcoin is too volatile to be used for product pricing. Gold had intrinsic value before it had monetary properties. People wanted it because of its special properties. Gold is scarce and valuable because its unique properties are difficult to replicate. No one knows what Bitcoin will be like in 5 or 10 years. It may not exist anymore. It has no value unless you exchange it for something.

“Gold is just a shining stone”

Kelly said Bitcoin has utility, just like gold.

Bitcoin has value just like gold. However, gold is just a stone, it has no special value, it is just a stone that shines.

Schiff responded:

There is no limit to the number of digital currencies. There are hundreds of digital currencies on the market. Why doesn't anyone use Myspace? Because Facebook already exists.

The debate once again proved that Schiff does not consider Bitcoin as an investment option, especially compared to gold. Schiff has repeatedly stated on CNBC that Bitcoin is worthless in his opinion. When the price of the currency rose in 2013, Schiff once said that Bitcoin was a bubble and a "modern tulip bubble."

Notably, Schiff’s precious metals company has been accepting Bitcoin for gold purchases since 2014.

Finally, here are the poll results posted by CNBC on Twitter. They launched a poll asking netizens who watched the show who they thought won the debate. Obviously, Bitcoin won.