Kenneth Rogoff is a professor at Harvard and reveals his thought on the cryptocurrency market. He says that the likes of bitcoin could become worthless but that there is a chance they become very valuable.

Cryptocurrencies are a lottery

Bitcoin is down around 80 per cent from its peak in January. All the larger cryptocurrencies are collapsing around us but are this the end of cryptocurrencies? Kenneth Rogoff writes the article during a time when the market sentiment is low. Kenneth Rogoff is a professor of economics and public policy at Harvard University. He was the IMF’s chief economist from 2001-03.

He suggests that the sentiment among cryptocurrency enthusiasts is highly bullish and they are not ready to give up. The crypto bulls see a total market capitalisation between $5 – $10 trillion. The drop from a high of $20,000 to $3,500 is no reason to panic. Falls as this has happened before. However, Rogoff argues that investing in cryptocurrencies is like buying lottery tickets. He writes:

“So, while we shouldn’t be surprised by this year’s cryptocurrency price bust, the price of these coins is not necessarily zero. Like lottery tickets, there is a high probability that they are worthless. There is also an extremely small outside chance that they will be worth a great deal someday, for reasons that currently are difficult to anticipate.”

Bitcoin evangelists still have a huge belief in cryptocurrencies and argue that it can become digital gold.

Saying that the cryptocurrency Bitcoin is digital gold is “nutty”

Even though many are extremely positive about bitcoin and compare it to gold, Rogoff says that it is nutty. He states that gold is widely used all over the world while bitcoin does not have any other use case than being digital money. Unlike physical gold, Bitcoin’s use is limited to transactions. It makes the cryptocurrency more vulnerable to a bubble-like collapse. Additionally, the cryptocurrency’s energy-intensive verification process is vastly less efficient” than systems that rely on “a trusted central authority like a central bank. Rogoff says that the long-term value of bitcoin is rather $100 than $100k.

However, the world is starting to wake up, and regulations are coming into place. Countries such as Sweden and China are even looking into creating their digital currencies. In the end, Rogoff thinks that countries will collaborate to avoid countries to become money-laundering destinations and perhaps create global regulations.

A start of global regulation is potentially underway. Recent news reveals that Seven EU members have decided to collaborate. The group reportedly signed a joint declaration detailing the partnership in Brussels yesterday. The partnership aims to boost blockchain adoption in Southern Europe, to transform local economies.

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