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Don’t fall for the bitcoin bubble, even the Flintstones had a greater system, warns economist Nouriel Roubini


More than two years after US lawmakers warned that cryptocurrencies are “the mother of all scams and bubbles,” economics professor Nouriel Roubini remains a hater.

“Since the fundamental value of Bitcoin is zero and would be negative if a reasonable carbon tax were applied to its massive polluting energy production, I assume that the current bubble will eventually end in another bankruptcy,” wrote Roubini in an opinion column for the Financial Times on Wednesday.

Read: The power for Bitcoin is soaring to new heights as the price gets a Tesla boost

Since its October 2018 warning, Bitcoin BTCUSD is up -5.07% by more than 600% and is currently hovering at $ 45,000, up nearly 60% this year. A recently spiked segment brought Bitcoin briefly to $ 48,000 on Tuesday, triggered by a $ 1.5 billion investment by electric car maker Tesla TSLA, -4.56%..
The company also cited plans to accept future payments in bitcoins.

Read: Why is Tesla buying Bitcoin?

Roubini paid tribute to Tesla, saying bitcoins are still “barely used by legitimate companies.” He also recalled the last bitcoin bubble of 2017-18 when the cryptocurrency rose from $ 1,000 to $ 20,000 and then back to $ 3,000.

And don’t even refer to cryptocurrencies as “currencies” as they cost next to nothing, he said. “They’re not a scalable means of payment: Bitcoin lets you make five transactions per second while the Visa network does 24,000 transactions.”

Add to this the volatility that can wipe out profits within hours and the fact that relying on cryptocurrency tokens marks a return to the Stone Age, an excavation he made earlier. Invoking this “modern Stone Age” cartoon family, he said even the Flintstones had “a more sophisticated monetary system based on a benchmark” – clams.

Crypto, he says, is “just playing with a speculative asset bubble, worse than the tulip craze, as flowers had and still have. Its store of value against tail risks has not been proven. Worse still, some cryptos known as “shitcoins” are primarily financial scams or are daily belittled by their sponsor, “said the economics professor at New York University’s Stern School of Business and chairman of Roubini Macro Associates.

And cryptocurrencies will not “decentralize finances, provide banking services to non-banks, or make the poor rich,” as bitcoin mining, for example, is mostly controlled by oligopolistic miners in far-flung places like Russia, China or Belarus.

Read: Most Bitcoin investors are inexperienced and shy of volatility. You play Russian roulette, says this analyst

Neither Bitcoin nor its competitors will see to it that investors look for safe havens – hedges against inflation, weak currencies and bottlenecks in the face of loose monetary policy, financial crisis and geopolitical stress. “Gold, inflation-based bonds, commodities, real estate and even stocks are reasonable candidates,” wrote Roubini.

Opinion: This gold and bitcoin investor says that only one offers real long-term security

Bitcoin undoubtedly has many fans, including billionaire Mark Cuban, who referred to some crypto assets as digital stores of value in a blog post in January.

Read: Should I buy Dogecoin? Why the prices for the cryptocurrency are rising – but risky

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