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Former chief economist of the IMF and current professor of economics and public policy at Harvard University, Kenneth Rogoff believes that currently bitcoins and other cryptocurrencies amount to little more than "lottery tickets" at this time. Writing in the Guardian on Monday, Rogoff said that while some believe cryptocurrencies have had their day and are in an irreversible phase, it is hard to say with certainty that their value will drop to zero.
In his view, there are several questions about the ability of large economies to embrace cryptocurrency, which means that outside of the joint regulatory action, the nationwide adoption of cryptocurrencies will likely be driven only by weak pariah states such as Iran, Somalia, Venezuela and North Korea. He says this makes it difficult to predict the eventual fate of this asset class.
Rogoff raises questions about Bitcoin
In the article, Rogoff questions the intrinsic value of bitcoin, stating that its status generally considered "digital gold" is unsustainable because unlike real gold, it has no application outside of a monetary context and the massive energy consumption required to keep it running is substantially less efficient than a central banking system.
According to him, large economies will not tolerate cryptocurrencies much longer in their current state because of their ability to facilitate money laundering, and yet if their anonymity / pseudonym is torn away, they will lose their mass appeal, which actually puts the bitcoin into a -22 position. Accordingly, Rogoff believes that long-term use and the adoption of cryptocurrency in its current form does not fall within the major regulated economies, which will essentially serve as a preservation to a group of failed states such as Venezuela, which has made several titles with his plan to revitalize his devastated economy with the petro.
Gathering further questions about the future of bitcoin, Rogoff said:
"Lawmakers are gradually awakening the fact that they can not tolerate expensive transaction-based transaction technologies that facilitate tax evasion and criminal activity, while 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 can innovate, but in due course the government regulates and appropriates. "
According to Rogoff, what will lead to this is essentially a lottery scenario in which the long-term value of bitcoin will probably be closer to $ 100, but it could also be $ 100,000 for a plethora of reasons that are difficult to visualize at the moment. Explaining why even a widespread public opinion in bitcoin as a store of value is not enough to maintain its value over time, said:
"Economists (including myself) who have worked on this type of problem for fifty years have found that price bubbles surrounding intrinsically worthless assets must eventually explode." Prices of assets that have a real underlying value do not they may arbitrarily depart from historical benchmarks, and the money issued by the government is certainly not a pure social convention, governments pay employees and suppliers and demand tax payments in legal currency. "
In the end, he said, it is government actions that will determine whether bitcoin and other cryptocurrency activities can achieve general trade and retail adoption or whether the cryptois is destined to become the dystopian currency for obscure websites. who sell illegal goods and services and failed states with collapsed economies.
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