The renowned economist Robert Shiller, who has been awarded the Nobel Prize for the empirical analysis of asset prices, has expressed a negative sentiment towards cryptocurrencies once again. Having claimed that bitcoin is an “amazing example of a bubble” and adding that “there was no question about it” as early as January 2014, he took another swipe at virtual currencies, saying that they are going down a similar path, paved by previous currency innovations that have failed.
With big institutional players such as Goldman Sachs, Santander or LMAX set to enter the digital currency markets in the near future, enthusiasm and optimism among the crypto aficionados is growing. On the other side of the coin, we have numerous renowned investors like Warren Buffet, Charlie Munger or Bill Gates, lambasting cryptocurrencies and claiming they are worthless.
Shiller, known for predicting dot-com and housing bubbles and warning about them, pointed to the 19th and 20th century when explaining his outlook on crypto. He listed a variety of failed monetary examples and mentioned historical figures such as Karl Marx and Friedrich Engels.
Writing for Project Syndicate in an article named “The Old Allure of New Money” he claimed that, “Each of these monetary innovations has been coupled with a unique technological story. But, more fundamentally, all are connected with a deep yearning for some kind of revolution in society.“
Digital currencies are no different as he went on to add that, “It’s another faddish example of human behavior, it’s glamorous. I don’t mean to dismiss it. Some smart people went into these, and other cryptocurrencies. […] A lot of people are kind of angry about politics if you noticed. So there is a big element of people who don’t trust the government anymore. And they like the idea that this didn’t come from the government it came from some really smart computer scientist. They really like that. Its a great story for today’s markets.“
Additionally, Shiller says that virtual currencies create a mystery that entices the buyers as, “Practically no one, outside of computer science departments, can explain how cryptocurrencies work, and that mystery creates an aura of exclusivity, gives the new money glamour, and fills devotees with revolutionary zeal. None of this is new, and, as with past monetary innovations, a seemingly compelling story may not be enough.“
The total number of available cryptocurrencies has eclipsed 2000 and with new ICOs popping on a daily basis, we can only expect that number to grow further down the road. Despite the volatility and uncertainty surrounding it, bitcoin has been in the market for almost a decade now, so we‘re not sure if we could describe it as a new product.
Having a story is surely not enough but with developers working on new use cases for digital currencies and particularly blockchain technology, we are pretty sure that crypto is here to stay.
Image Source: “Flickr”
I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.