The former chief economist of the IMF and current professor of economics and public policy at Harvard University, Kenneth Rogoff, believes that bitcoins and other cryptocurrencies currently represent little more than “lottery tickets” at this time. Writing in The Guardian on Monday, Rogoff said that while some believe that cryptocurrencies have had their day and are in an irreversible decline, it is actually difficult to say with certainty that their value will really fall to zero.
In his opinion, there are several questions about the ability of large economies to successfully adopt cryptocurrency, which means that outside of joint regulatory action, the nationwide adoption of cryptocurrencies will be driven only by weak states such as Iran, Somalia. , Venezuela and the North. Korea. This, he says, makes it difficult to predict the final destination of this asset class.
Rogoff raises questions about Bitcoin
In the article, Rogoff questions the intrinsic value of bitcoin, claiming that its general status as “digital gold” is unsustainable because, unlike real gold, it has no application outside of a monetary environment, and the massive consumption of energy required to maintain it. functioning is substantially less efficient than a central banking system.
According to him, the big economies will not tolerate cryptocurrencies in their current state for much longer due to their ability to facilitate money laundering and, however, if their anonymity / pseudonym is eliminated, they will lose their massive attractiveness, which effectively places Bitcoin in a trap. -22 position. As a result, Rogoff believes that the long-term use and adoption of the cryptocurrency in its current form lie outside the large regulated economies, which will essentially make it the domain of a group of failed states like Venezuela, which has emerged in several headlines. His plan to revitalize his devastated economy with petro.
Asking more questions about the future of bitcoin, Rogoff said:
“Regulators are gradually awakening to the fact that they can not tolerate the big technologies of expensive transactions to track that facilitate tax evasion and criminal activity. At the same time, Swedish central banks to China are realizing that they can also issue digital currencies … When it comes to new forms of money, the private sector can innovate, but in due time the government regulates and appropriates ” .
In Rogoff’s view, what this will lead to is essentially a lottery scenario in which the long-term value of bitcoin is likely to approach $ 100, but possibly also $ 100,000 for a plethora of reasons that are difficult to visualize at this moment. Explaining why even a widespread public belief in bitcoin as a store of value is not enough to maintain its value over time, he said:
“Economists (including myself) who have worked on these kinds of problems for five decades have discovered that the price bubbles surrounding assets with no intrinsic value should eventually explode. The prices of assets that do have an actual underlying value can not be arbitrarily deviated from historical benchmarks. And the money issued by the government is not a pure social convention; Governments pay employees and suppliers, and demand tax payments in fiat currency”.
Ultimately, he said, it is the government’s actions that will determine whether Bitcoin and other cryptocurrency assets can achieve commercial and general retail adoption or whether the cryptographies are destined to become the dystopian currency of the dark-networked websites that sell illegal goods and services and failed states with collapsed economies.
Also published on Medium.