Prof. Kenneth Rogoff: ‚Bitcoin will explode‘
Bitcoin will soon be regulated and the bubble will burst, that’s what Harvard professor Kenneth Rogoff thinks.
He stated this in an interview with us.
These are his words:
„Well, certainly I think I agree that [Bitcoin] is speculative. I’ve been a Bitcoin skeptic and certainly the price has gone up. But there’s sort of a final question about what the utility is. It only has value because people think it has value. This is a bubble that would burst.“
According to Rogoff Bitcoin Formula certainly cannot bankrupt states and current monetary systems:
„I can imagine Bitcoin being used in failed states. It is conceivable that it might have some utility in a dystopian future. But I think all governments will not allow anonymous transactions on a large scale. They simply won’t allow it. Regulation will come. The government will win. It doesn’t matter what the technology is. So I think you know that beyond if there is no use, in the long run, yes, the bubble will burst. I hope there isn’t such a valuable use but I suppose it’s a hedge against dystopia.
Rogoff also says he is aware that any regulation could cause the price of cryptocurrencies to fall, but adds:
„That’s not the purpose. But you know you have to have transactions that obey the same kind of information rules as everything else. So I think governments are working on that. It’s not used that widely. And I suspect that even though Bitcoin lobbyists have been successful in getting it in some places, it’s not going to last.“
The Validity of Kenneth Rogoff’s Theses on Bitcoin
Kenneth Rogoff, besides being a professor at Harvard, has also been Chief Economist at the International Monetary Fund. He is considered one of the top ten economists in RePEc’s Ranking, the Research Papers in Economics that disseminate economic research by bringing together experts from 102 countries around the world.
In short, his point of view is by no means marginal.
What is certain is that the possibility of regulating cryptocurrencies is more than concrete. Janet Yellen, the new Biden-era US Treasury Secretary, will work on it. She herself, while recognising the potential of cryptocurrencies, suggested that regulation could be done to encourage legitimate use, while curbing illicit uses.
Only a few days earlier, Yellen had stated that Bitcoin and cryptocurrencies are used for illegal purposes. These words were enough to make the market turn negative. This episode proves the validity of Rogoff’s argument that regulation would drive down the prices of crypto assets.