Bitcoin, according to a Nobel laureate economist, will be zero in 10 Years.
Eugene F. Fama is also known as "The Father of Modern Finance," Tell me about it Capitalisn't podcast that this digital asset's rise has "a predictable ending."
It would be a good argument, he said. "unsustainable" to have a whole financial system built using blockchains because this would require too much computing power—and "all we know about monetary theory" suggests cryptocurrencies shouldn't survive.
"Cryptocurrencies are such a puzzle because they violate all the rules of a medium of exchange," Fama said. "They don't have a stable real value. They have highly variable real value. That kind of a medium of exchange is not supposed to survive."
Bitcoin is a digital currency with a limited supply. There are 21 million bitcoins. "digital gold" It is considered a safe haven against inflation rather than an everyday payment cryptocurrency. But this argument doesn't hold much weight with Fama either.
"It's only digital gold if it has a use. If it doesn’t have a use, it's just paper. Not paper, it's air, not even air," “The economist” said.
Infinite Market Cap’s list shows that Bitcoin, which is the seventh-most valuable asset on the planet, has an estimated total market value of $2 trillion. According to CoinGecko, at the time this article was written, Bitcoin’s price had fallen by 1.1% from yesterday to just over $97,000.
When asked whether he's prepared to call this a bubble, Fama said: "I can't predict when it will bust. I'm hoping it will bust, but I can't predict it. I'm hoping it will bust because if it doesn't, we have to start all over with monetary theory. It’s gone. It might be gone already, but you have to start all over."
Fama said he was willing to say this bubble would burst in 10 years—quipping that's because he's 86 years old and "the likelihood I'm going to have to pay up on this one is pretty low."
And he said that, if and when the crypto sector does blow up, it's likely that the crypto sector will go "running to the government" A bailout is needed.
He went on to argue that the crypto space should be kept separate from the traditional financial system, meaning the wider economy won't have to "pick up the pieces" This industry will collapse if it continues to grow.
Given the ties between Wall Street The following are some examples of how to get started: crypto are growing ever closer—through spot Bitcoin and Ethereum ETFs and the removal of regulations that dissuaded banks from taking custody of digital assets—that could prove difficult.
Stacy Elliott edited this article.