Economists Can’t Wrap Their Head Around Bitcoin; It’s A ‘Horrible Thing’ With A ‘Fundamental Flaw’
Economists are having a hard time understanding Bitcoin and want it regulated.
A decline of 30% in the price of Bitcoin has the skeptics rearing their ugly heads. No one wants to look at the past market cycle it looks like.
In an interview with Bloomberg, Erik Nielsen, Chief Economist at UniCredit Group, said Bitcoin is only useful for criminal activity. Neilsen ranted,
“I am completely on rooftops and the Lagos line. It's a horrible thing. It uses energy like there's no tomorrow. The site to produce this piece of nothing. We are polluting the solution of polluting the environment with this damn thing. And the only useful thing it is if that's useful is criminal activity. I can see no other reason to use it. It's nothing.”
UniCredit Group Banks paid a $1.3 billion penalty for Iranian and other sanction violations in 2019.
What’s happening is that wealthy people are having problems finding something to invest in, and “It's like a lottery ticket for these people, I think,” he said. And “a bank is not in the business of selling lottery tickets,” said Nielsen on the prospect of banks getting on board with cryptos.
“It is nothing. There are no underlying assets. It has no social use. That's just so I am shocked if European banks start to trade in,” is his feelings for BTC.
Government Will Win
Another skeptic is Harvard University Professor Kenneth Rogoff, former chief economist of the International Monetary Fund, who says cryptocurrency transactions need to obey the same regulations as everything else. He said,
“I think governments are on it. It's not being used that widely. And I suspect although the Bitcoin lobbyists have been successful in getting it in some places that won't last.”
“Governments are not going to allow pseudo-anonymous transactions on a big scale.” When that happens, the “government will win.”
Bitcoin not only “needs to be regulated,” but Rogoff also questions the leading digital currency’s use — “Is it just valuable because people think it's valuable? That is a bubble that would blow up.” “I suppose it's a hedge against dystopia,” he said.
It’s not only about regulation and use cases; Bitcoin skeptics see a “fundamental flaw” inherent in it as well. This flaw is that supply can’t be adjusted according to demand, as per Paul Donovan, chief economist UBS Global Wealth Management.
“People are unlikely to want to use something as a currency if they’ve got absolutely no certainty about what they can buy with that tomorrow,” Donovan said.