Dr. Doom Nouriel Roubini, 2008 Financial Crisis Predictor, Attacks Crypto Again
Economist Nouriel Roubini is widely known for his specialization when it comes to analyzing market trends. In a recent report shared by Forbes, it has been revealed that Roubini has been digging into the crypto market. In particular, he has bashed existing claims of what Bitcoin really is and what he sees as being ‘myths’.
Roubini’s statements were shared during an event, dubbed BlockShow, which took place in Las Vegas. The first comment he shared was that of the current crypto stance, which is obviously a total “collapse”, however, as he went on, many of the comments made could potentially reduce a crypto fanatic’s confidence level.
Bitcoin is Not an Alternative to Money
A common belief that supported the entire crypto market is that digital assets, like that of Bitcoin and altcoins, can serve as an alternative to money. However, Roubini does not see how this makes any sense as the giant does not house factors like, “A unit of account, means of payment, and a stable source of value and purchasing power.” Hence, claiming that such a comparison should not be made to begin with. He was also quoted referring to altcoins as being worse than Bitcoin.
Decentralization does not exist?
Another facet of the crypto sphere is the notion of decentralization. That is, initiating a peer-to-peer transaction without the need of middlemen – most popular example being financial institutions. When asked his thoughts on cryptocurrency’s decentralization, Roubini simply said, “Decentralization is a total myth.” His argument is that the several players involved, i.e. miners and exchanges only exist because they are centralized.
He further made the case of miners, who require funding for the necessary equipment. Roubini claims that “top five mining pools control 70% of all mining,” implying that most crypto related crimes happen in countries with high mining activities.
Gini Index Shows Crypto Wealth is Centralized
We’ve heard of crypto whales who contribute to the fluctuations of the crypto market. The next case Roubini makes is not everybody within the crypto sphere is equally wealthy. To prove this point, Roubini refers to the Gini Coefficient, which has been defined by Forbes as, “an economic term that expresses distribution of wealth across a population from 0% to 100%,” where the lower end indicates equality in wealth, while the latter extreme indicates dominance.
The economist noted that Europe’s Gini coefficient is 50%, North Korea’s is 86% and Bitcoin’s 88%. Keep in mind, as the percentage increases, it implies less and less equality in wealth. This only shows that a few number of individuals profit from the crypto sphere compared to others, which is a significantly large gap.
Initial Coin Offerings (ICOs) are Securities. Period.
Roubini seems to side with the U.S Securities and Exchange Commission (SEC)’s perspective that ICOs, at large, should be considered securities. In particular, he was quoted calling the funding process as “non-compliant securities,” and that said fanatics are simply finding ways, “to avoid securities law”.
Smart Contracts: “Neither Smart nor Contracts”
Smart contracts are terms and conditions set by two parties involved, which are prepared through codes. The Ethereum blockchain is a popular one associated with smart contracts, and according to Roubini, they are “nether smart nor contracts”.
He seems to take a traditional approach towards the notion of “contracts”, as such a term is only valid given a lawyer’s consent. His second argument is that smart contracts still house bugs that are not simple to fix. Roubini strongly adds that “75% of DApps are CryptoKitties, Ponzi Schemes and casino games.”
Clearly, shots were fired multiple times by the economist who first predicted the 2008 financial crisis. Given his experience within the financial sector, along with his dedication towards research and accuracy, this might make one question the reality of the crypto sphere.
Do you still stand strongly for the crypto market? Has your perspective changed since Roubini’s viewpoints? Comment below.