Another famous economist downplays bitcoin and crypto – he doubled down on his claims of bitcoin being a bubble and failed currency. Cryptocurrencies are not the first human attempt to revolutionize money, they could be most recent case of more than a century’s worth of failed efforts to do it, according to Robert Shiller, known for his correct predictions about the dot-com and housing bubbles.
Writing in a new blog posted on May 21, the Nobel-prize winner and Yale professor of economy wrote that enthusiasm for the cryptocurrency market keeps going strong despite warnings that it could be a scam.
‘One must bear in mind that attempts to reinvent money have a long history,’ he said. Yet, while new monetary innovations create excitement to begin with, they fail to last, he added.
Shiller, famed for warning about the housing and dot-com bubbles, mentioned historic attempts to start new currency in the early 19th century, when merchants tried to replace the gold standard with “time money.” The “Cincinnati Time Store” for example sold merchandise in units of work and closed just three years after it launched. A century later during the Great Depression, economist John Pease Norton proposed a dollar by electricity, which also failed to catch on.
The mania around bitcoin today is also due in part to its mystery, the Yale University professor said.
“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,” Shiller said. “None of this is new, and, as with past monetary innovations, a seemingly compelling story may not be enough.”
Not everyone shares his opinion as Balaji Srinivasan, chief technology officer at cryptocurrency trading platform Coinbase Inc., wrote in a magazine distributed at the Consensus 2018 industry conference last week that cryptocurrencies are living up to their hype in at least three ways: As a store of value with Bitcoin, as a vehicle to raise capital with initial coin offerings and as a faster way for cross-border transfers.
Cryptocurrency prices have surged amid growing interest in the nascent market. But some famous investors and business leaders think that investing in digital currencies and initial coin offerings (ICOs) is an unsafe game. JPMorgan Chase CEO Jamie Dimon has called bitcoin a “fraud” and later said he isn’t interested in the subject.
Warren Buffett recently told Liz Claman on FOX Business that bitcoin has “produced nothing.” His longtime business partner, Charlie Munger, has called bitcoin “rat poison”and a “turd.”