Kenneth Rogoff Questions Intrinsic Value of Bitcoin versus Arbitrary Price BreachDecember 11, 2018
Kenneth Rogoff Calls Bitcoin a Lottery Ticket. This he also states about other cryptocurrencies.
Kenneth Rogoff is the former IMF chief economist, currently Professor of Economics and Public Policy at the Harvard University.
When talking about the current scenario of cryptocurrencies, he stated that they, “Amount to a little more than the lottery ticket.” The Economics Professor wrote in the Guardian on Monday thus.
He further added that there had been cryptocurrencies who have had their day. Some of them are on their irreversible downward slide. However, he stated that it is difficult to say that their value will drop down to zero.
According to him, several concerns exist when it comes to large economies to successfully take to the cryptocurrency. This he stated in a way to mean that outside the scope of joint regulatory action, adopting the cryptocurrency at a national level will be only pushed by weak states like Venezuela, North Korea, Somalia, and Iran.
Rogoff questions the intrinsic value of Bitcoin. He put that Bitcoin is considered to be the gold standard for cryptocurrency; however, its sustainability is not actually of gold. While the theory of gold by itself is not entirely confirmed, Bitcoin that has no application outside the commercial setting when considered from the point of its large energy consumption for sustenance is, in reality, less efficient than the central banking system.
It will not be possible for larger economies to put up with the dominance of cryptocurrencies. Perhaps, it can happen for a short term, but in the longer term, there is a high risk of this currency to facilitate money laundering.
In cases where their anonymity will be stripped away, the masses will lose their appeal towards this currency.
Regulated economies will not bring the idea of adopting cryptocurrency to their states. However, failed states like Venezuela will. Venezuela has already made it to the headlines about its plan to rejuvenate its devastated economy using the petro.
Regulators are now clear that it might not be practical for them to adopt technologies that are hard to trace. Given the risk of tax evasion and money laundering, the regulators will want to adopt.
It has forever seen that the private sector will bring in innovation and the government will regulate and appropriate.
Economists are of the opinion that the price of assets that are intrinsically worthless should burst at a point in time. There is a historical benchmark for pricing. It cannot be breached arbitrarily.