Emerging economies’ bloc ditches greenback in $260b worth trade
economy2 hours ago
Economist Nouriel Roubini, one of the relentless critics of cryptocurrencies, reiterated his warning against Bitcoin, saying its fundamental value is zero.
Roubini, famously known also as “Dr Doom” for his accurate but pessimistic forecasts of global economic trends, railed against the popular cryptocurrency that reached record high of above $48,000 a few days ago, saying “I predict that the current bubble will eventually end in another bust.”
He argued that since the fundamental value of Bitcoin is zero, the digital currency would be negative if a proper carbon tax was applied to its massive polluting energy-hogging production. “I predict that the current bubble will eventually end in another bust,” he said.
Nouriel Roubini, a professor of economics at the Stern School of Business at NYU, has long been a critic of cryptocurrencies, often referring to the digital assets as "s--t coins."
Bitcoin leaped above $48,000 for the first time ever after Tesla said that it would soon accept Bitcoin as payment for its vehicles. The electric carmaker, led by crypto enthusiast Elon Musk, also disclosed that it is holding $1.5 billion of reserve cash in Bitcoin rather than traditional currency.
Despite Roubini and other bears calling a bubble, the digital asset has appreciated 333 per cent over the past year, and investors who put $100 in the coin 10 years ago, would have $9.2 million today.
Roubini, who is prominent among other staunch critics of the cryptocurrency, believes bitcoin is "not a unit of account," is "not a scalable means of payment," and is "not a stable store of value." Instead, he argues, it is a pump and dump scheme, where fear of missing out leads retail investors to speculate on an ever-increasing bubble.
The economist, who predicted the Global Financial Crisis of 2008, argues that cryptocurrency mining and processing is hurting the environment. On that point, there is evidence to back up his claims.
At current rates, bitcoin mining uses the same amount of energy every year as the Netherlands did in 2019, according to data from the University of Cambridge and the International Energy Agency.
A study out of Harvard in 2020 also found that although cryptocurrency mining isn't "burning down the planet", there is "a scenario where each $1 of cryptocurrency coin value created would be responsible for $0.66 in health and climate damages."
Speaking on a panel about digital currencies at the World Economic Forum's online Davos Agenda, Bank of England governor Andrew Bailey said crypto-currencies in their current state were not likely to be the final settling point, as businesses, consumers and regulators would look for digital currencies that are stable, safe and well-designed before fully shifting away from traditional currencies like the pound and dollar.
Other celebrity adversaries of Bitcoin include former White House chief economic advisor Gary Cohn and former Goldman Sachs chief executive Lloyd Blankfein.
issacjohn@khaleejtimes.com
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