He does, however, say we should separate the cryptocurrency from blockchain technology—which “creates an enormous chance to increase productivity in many companies.”
In an interview with Business Insider, economist Nouriel Roubini—the man who predicted the 2008 crisis as early as 2006—says the rise in the price of BTC is founded on nothing but speculation, and that it “feeds on itself.” But like many critics of the cryptocurrency, blockchain technology gets his approval.
“First of all, I would separate the blockchain from the bitcoin. Blockchain creates an enormous chance to increase productivity in many companies and I think the technology to be something very good. But the bitcoin and other cryptocurrencies – this is something entirely different. In my opinion, there is a gigantic speculative bubble related to the bitcoin,” Roubini said.
When asked why, he cites its popularity with the black market, and the impending government crackdown that will ensue.
Because this is neither a serious method of payment nor a good way to store capital. The bitcoin feeds on itself. There are no fundamental reasons for its price to reach such levels. What’s more – it is also used by criminals, for their shady business. I think that more and more countries will start to make cryptocurrency exchanges illegal like China did. New regulations will be adopted. So, this will find its end.
It is true that BTC’s price hike may simply be due to more people cashing in out of speculation—especially at a time when the now cancelled SegWit2x hard fork gave rise to talks of free money—but the statement pertaining to its unreliability as a payment method and capital storage may only be temporarily true.
Liquidity has been a problem the past few years for Bitcoin, as the blockchain struggled to keep up with transaction volume and processes dragged on for long periods of time. With SegWit2x out of the picture, that leaves two major solutions to solve the scaling problem: the legacy chain (SegWit BTC), and the large block chain, Bitcoin Cash (BCH). Some believe that the legacy chain’s signature data removal and addition of sidechains do not solve the congestion and is just a band-aid that primarily lets businesses take over transaction fees. Meanwhile, BCH aims to keep transactions low and processing times fast but has yet to refine their protocol implementation.
International Monetary Fund (IMF) head Christine Lagarde echoes the notion that although cryptocurrencies are in their infancy stage, they may take over in the long run: “many of these are technological challenges that could be addressed over time. Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies,” she said at the Bank of England conference in September.