Bitcoin Is Like A ‘Lottery Ticket’: Says Harvard Economist

By Sumedha Bose

Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, has recently made a bold assumption about the future of Bitcoin, and we warn you, it’s not looking too good for the crypto.

(Read more on: Bitcoin Economy)

In an article for the popular news outlet, The Guardian, the former chief economist of the International Monetary Fund (IMF) refuted the “overwhelming sentiment” among crypto advocates, which estimates that the

“market capitalisation of cryptocurrencies could explode over the next five years, rising to $5-10 [trillion].”

(Read: MD Of IMF Wants The Introduction Of State-Backed Cryptocurrencies)

He instead called Bitcoin (BTC) “a lottery ticket,” and referred to the past history of volatility of the emerging asset class as an indicator of the inevitable doom of the cryptocurrency.

He was quick to predict that the future worth of BTC is “more likely to be $100 than $100,000.” He disregarded the commonly held assumption that Bitcoin is like “digital gold”, calling it a “nutty” presupposition.  He says that unlike Bitcoin Gold, Bitcoin’s use only in transactions makes it susceptible to a bubble-like collapse. He also points out the absence of “a trusted central authority like a central bank” as a downside for Bitcoin.

The double edged sword here that the economist points out is that

“take away near-anonymity and no one will want to use it; keep it and advanced-economy governments will not tolerate it.”

He further adds,

“The right way to think about cryptocurrency coins is as lottery tickets that pay off in a dystopian future where they are used in rogue and failed states, or perhaps in countries where citizens have already lost all semblance of privacy. It is no coincidence that dysfunctional Venezuela is the first issuer of a state-backed cryptocurrency (the “petro”).”

With the issuance of multiple central banks backed digital currency, Rogoff agrees that there may come a time when governments “regulate and appropriate” the innovations of the new asset class, but it will eventually become more clear that regulators

“cannot countenance large expensive-to-trace transaction technologies that facilitate tax evasion and criminal activity.”

(Read: Robert C. Merton, the Nobel Laureate Economist Got It All Wrong About Bitcoin)

Source: Article in The Guardian