Nobel Laureate Joseph Stiglitz Missed the Boat on Bitcoin, Now Wants to Outlaw
His reasoning? He believes “Bitcoin is successful only because of its potential for circumvention, lack of oversight.”
It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down. The value of a bitcoin today is expectations of what the bitcoin is going to be tomorrow.
While this might be the case, the same could be said for traditional equity markets as well, making his argument seem rather flimsy. Stiglitz eventually went on to reference tulip mania, a painfully inaccurate analogy.
Meanwhile, the entire cryptocurrency market is valued at only $280 Billion. While that may seem like a lot, it’s only a fraction of the total market cap for gold (about $7 trillion). Any comparison to the dot-com bubble misses the possibilities unlocked by blockchain technology. Given that the blockchain isn’t smoke and mirrors like Pets.com, I think we should be holding off on taking these comparisons too seriously.
Several mainstream economists have condemned the cryptocurrency movement, stating that there is no real value behind virtual currency. In September, JP Morgan CEO Jamie Dimon said that if he found any of his employees trading the cryptocurrency, he would “fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous”. Oddly enough, JP Morgan simultaneously released a statement saying they were weighing whether to help their own clients bet on the price of bitcoin via proposed futures contracts offered by CME Group.
It seems that we will continue to see aging economists (and unquestionably brilliant men in their own right) step forward and try to analyze the crypto movement from a traditional economic point of view. At their age, a risky new asset that they don’t understand very well won’t help their career or their bank account, so why would we expect them to support it? Ultimately, their criticism will only increase the volatility they warn about and prevent them from riding the wave.