The major United Kingdom daily broadsheet, The Guardian, published an article written by the former chief economist at the International Monetary Fund (IMF), who compared the famous cryptocurrency Bitcoin (BTC) to a “lottery ticket”. The article came out during the recent downfall of the crypto market and its author current Harvard Professor of Economics and Public Policy Kenneth Rogoff wrote that the “overwhelming sentiment” that crypto investors have clearly points to the possibility that the total revenues generated by the crypto market could inflate in the coming five years, so as to increase up to $5-10 trillion.
The article’s author also presented his opinion that the historic price volatility of the asset class which is just coming into the light, clearly shows that Bitcoin’s fall from its ever high price of twenty thousand U.S. dollars to less than four thousand U.S dollars earlier this week is not a reason for any individual who is involved in the crypto market.
Moreover the author also disregarded the very positive image the steadfast supporters have of Bitcoin that it is just like solid gold, by calling it “nutty”. The economist estimated that Bitcoin’s future value would most likely be equal to a hundred U.S. dollars instead of a thousand U.S. dollars. The author Rogoff asserted that Bitcoin was more vulnerable to a very strong collapse since its use was only limited to transactions unlike solid gold. Plus the verification process of Bitcoin was very energy consuming along with being very less efficient as compared to systems that were based on a trustworthy central authority or institute such as a central bank.
He also asserted that governments all around the world and regulators were slowly realizing the fact that they cannot allow largely expensive and hard to trace transactions and technologies which implement these transactions that enable individuals tax evasion and possible criminal activities.
Rogoff was of the view that Bitcoin would lose its future value as a cryptocurrency if you removed the anonymity since people would stop using it. He placed Bitcoin in a double bind since on one hand if you take away the anonymity it loses its charm while on the other hand if keep the element of anonymity modern economy based governments would never allow it.
The economist also noted that while around the world governments might be gradually vying to regulate and appropriate the advancements of the cryptocurrency technology, as shown by the actions taken by multiple central banks regarding the regulations imposed by them on digital currencies and their issuance. The author argued that a coordinated worldwide regulation on cryptocurrencies and related entities would only be aimed at rooting out privately developed systems with only some geopolitical aberrations as exceptions:
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”).
The economist cum author’s, Rogoff, argument that discontented nation states all around the world such as Cuba, Iran, Somalia, Russia, North Korea, Libya, and Syria were now turning to utilize cryptocurrencies owing to the immense burden of the international sanctions imposed on them. They have already been put forth by multiple analysts over the course of the last many years. According to a recent report, issued earlier this fall, it was indicated that that the North Korean Government was using crypto to launder fiat into the country in order to avoid the sanctions imposed on it by the United States. According to another report published in summer this year, Iran on the other hand was taking it up a notch by exploring the development of its own national cryptocurrency.
Analysts, industry figures and supporters of Bitcoin have very different opinions and predictions for Bitcoin’s price in both the long and short terms. The level of optimism is still very high keeping in mind the recent downfall of the market as reports suggested that a new survey among British investors pointed out that a vast majority of individuals will purchase more crypto coins in hopes of prices rising later this year. Hence as we further explore the opinions and predictions, one thing is certain that more price volatility of Bitcoin can be expected in the interim.