Bitcoin was made in 2008 in response to the 2008 financial crisis. The goal is to develop a currency that doesn’t rely on banks and institutions that caused the crisis in the first place. In 2017, Bitcoin was able to reach near $20K level considering that it started only at around $1,000 during the start of the year. But 2018 was quite a different story for the crypto market. The crypto market since reaching its peak in January this year has declined by more than 70%.
However, it is true that there are regulatory changes that could potentially give the crypto market the much-needed participation of institutional investors in the next months or years to come. Though there is the participation of ICE, Goldman Sachs, and even banks that are willing to work with cryptocurrencies, the market still hasn’t recovered yet.
Roubini and His Anti-Crypto Stance
Nouriel Roubini who is one of the few economists able to successfully predict the 2008 financial crisis extends his warning on cryptocurrencies. Testifying at a congressional hearing on Thursday, Roubini mentioned that “Crypto is the mother or father of all scams and bubbles”. The NYU economist and self-described expert on international financial markets thinks that the first warning came when Bitcoin achieved its all-time high near $20,000 in December.
He said to senators that “literally every human being I met between Thanksgiving and Christmas of 2017” asked him if they should be investing in cryptocurrencies. These are folks according to him that have “zero financial literacy—individuals who could not tell the difference between stocks and bonds—went into a literal manic frenzy of Bitcoin and crypto buying”.
In his testimony, he called out “scammers, swindlers, criminals, charlatans, insider whales and carnival bankers”. In addition to this, he also included in his testimony “clueless retail investors’ FOMO”.
IMF Warns About the Risk of Cryptos
Of course, he isn’t the first one to warn of the negative impact of cryptocurrencies. The International Monetary Fund (IMF) also recently warned about the risk brought by the rapid growth of cryptocurrencies in today’s world.
In addition to this, the likes of Warren Buffet and even Bill Gates already gave a negative opinion regarding cryptocurrencies in the past. Warren Buffet even compared it to “rat poison”.
No Reason for Adoption?
For Roubini, he sees no reason for the adoption of cryptocurrencies. In fact, despite the possible benefits that it can bring, it seems that he has a different opinion on cryptos.
He also called blockchain to be overhyped. He said that “Now that the crypto bloodbath is in full view the new refuge of the crypto scoundrels is ‘blockchain’, the technology underlying crypto that is now alleged to be the cure of all global problems, including poverty, famines and even diseases. But as discussed in detail below blockchain is the most overhyped—and least useful—technology in human history”.
But of course, not everyone will agree with Roubini. Peter Van Valkenburgh who works as the director of research at Coin Center thinks differently. Though cryptos used as payment is not yet that widespread, Van Velkenburgh thinks that there are aspects that prove cryptos to be promising. He said that “Is it perfect? No. Neither was email when it was invented in 1972”.