More than two years after warning US lawmakers that cryptocurrencies are “the mother of all scams and bubbles,” economics professor Nouriel Roubini continues to hate it. “Given that bitcoin’s fundamental value is zero and it would be negative if a proper carbon tax were applied to its massive and polluting energy-hogging production, I predict that the current bubble will eventually end in another bankruptcy,” Roubini wrote in a column on opinion for the Financial Times on Wednesday.
Read: Electricity to power bitcoin rises to new heights as price gets a boost from Tesla Since its October 2018 warning, bitcoin BTCUSD, -3.16% has risen more than 600% and is currently hovering around $ 45,000, almost a 60% so far this year. A recent higher leg briefly pushed Bitcoin to $ 48,000 on Tuesday, triggered by a $ 1.5bn investment from electric car maker Tesla TSLA, + 0.55%. The company also referenced plans to accept future payments in bitcoins. Read: Why is Tesla Buying Bitcoins? Acknowledging Tesla, Roubini said that bitcoins are still “barely used by legitimate companies.” It was also reminiscent of the last bitcoin bubble of 2017-18, when the cryptocurrency went from $ 1,000 to $ 20,000 and then back to $ 3,000. And he doesn’t even refer to cryptocurrencies as “currencies,” since almost nothing is priced on them, he said. “They are not a scalable means of payment: with bitcoin you can make five transactions per second while the Visa network makes 24,000.” Then there’s the volatility, which can wipe out profits in a matter of hours, and the fact that relying on cryptocurrency tokens marks a return to the Stone Age, an excavation you’ve done before. Invoking that cartoon family from the “modern Stone Age”, he said that even the Flintstones “had a more sophisticated monetary system based on one point of reference”: the shells. Crypto, he says, is “just a game of a speculative asset bubble, worse than tulipomania, as flowers had and continue to be useful. Your store of value against tail risks is untested. And what’s worse: some cryptocurrencies, called “’shitcoins’, are financial scams in the first place or downgraded daily by their sponsor,” said the professor of economics at the Stern School of Business of New York University and president of Roubini. Macro Associates. And cryptocurrencies will not “decentralize finance, provide banking services to the unbanked, or enrich the poor,” because bitcoin mining, for example, is controlled primarily by oligopolistic miners, in remote places like Russia, China or Belarus. Read: Most bitcoin investors are inexperienced and shy of volatility. They are “playing Russian roulette,” says this analyst. Neither Bitcoin nor its rivals will provide that safe haven investors seek: hedging against inflation, weak currencies, and tail risks amid loose monetary policy, financial crisis, and geopolitical stress. “Gold, inflation-based bonds, commodities, real estate and even stocks are all reasonable candidates,” Roubini wrote. Opinion: This investor in both gold and bitcoin says that only one offers real long-term security. Bitcoin certainly has a lot of fans, including billionaire investor Mark Cuban, who described some crypto assets as digital stores of value in a blog post. January blog. Read: Should you buy dogecoin? Why cryptocurrency prices are rising but risky