Ex-IMF Chief And Current Harvard University Economist Thinks Bitcoin Is Just A ‘Lottery Ticket’
Bitcoin Is A ‘Lottery Ticket’ Says Harvard Economist
Kenneth Rogoff, a former IMF chief economist and Professor of Economics and Public Policy at Harvard University, mentioned that Bitcoin (BTC) and other virtual currencies are just ‘lottery tickets.’ He said that in an article released by The Guardian back on December 10.
At the same time, he said that it is difficult to say whether their price will fall to zero or how they will develop in the future.
He said that large economies might not have the ability to embrace virtual currencies and that the adoption of virtual currencies will be carried out by countries such as Venezuela, Iran or Somalia. These countries experienced different economic issues that pushed their citizens to use virtual currencies.
Although Bitcoin is one of the most popular and resilient virtual currencies in the market, there are some questions that Mr. Rogoff has related to it. He said that it is unsustainable to compare Bitcoin with gold because real gold has it has several applications.
Furthermore, he went on explaining that large economies will not tolerate virtual currencies in their current state. One of the main reasons behind this decision is the fact that they facilitate money laundering activities and they work anonymously and with pseudonyms.
About the future of Bitcoin, Rogoff commented:
“Regulators are gradually waking up to the fact that they cannot countenance large expensive-to-trace transaction technologies that facilitate tax evasion and criminal activity. At the same time, central banks from Sweden to China are realizing that they, too, can issue digital currencies… When it comes to new forms of money, the private sector may innovate, but in due time the government regulates and appropriates.”
In addition to it, Rogoff believes that this will lead to a lottery scenario. Bitcoin’s price could be closer to $100 in the future, but it could also possibly reach $100,000 for many different reasons.
He has also said that economists that work on the matter found that price bubbles in worthless assets eventually burst. The prices of assets that do have real value cannot be far from their historical benchmarks. Indeed, governments pay employees and suppliers with fiat currencies and collect taxes using the same fiat currency.
In the future, Bitcoin’s future will be determined by the actions taken by governments. This would also play an important role in what companies and individuals will do. If they are accepted, cryptocurrencies could be used for transactions or other things in the real economy. Nevertheless, they can collapse and work as currencies for illegal items, criminals and to purchase illegal goods and services.
JP Morgan Chase’s CEO, Jamie Dimon, said a year ago that governments will crash Bitcoin and that the most popular virtual currency is a fraud.
However, there are other analysts that remain bullish about the future of the space and how virtual currencies could change the world. Tim Draper, for example, believes that Bitcoin will reach $250,000 in the future.
Bitcoin has been embraced by several companies as a means of payment and there are institutions offering Bitcoin futures trading. Moreover, there are banks that are using Bitcoin to reduce costs and times for international transactions.