“The price of bitcoin is close to zero” Kenneth Rogoff / former chief IMF economist
Professor at Harvard University predicts the collapse of cryptocurrency trading.
For some, the cryptocurrencies have a reputation as obscure as a black hole. For others, on the other hand, it is the intangible gold of our times. Nevertheless, there will always be analysts blind to its glitter. One of them is Kenneth Rogoff (New York, 1953), professor at Harvard University and former chief economist at IMF (2001–2003). His voice anticipates the collapse of the bitcoin price — the star amongst the cybercurrencies that currently trades at over USD 8,000 per unit.
Question: Is bitcoin the greatest financial bubble on Earth?
Reply: The price of anonymous cryptocurrencies such as the bitcoin is probably close to zero in the long term. There exists, however, a real potential for those currencies that are traceable and intend to compete with debit and credit cards. But the state regulation will have a considerable impact on the process of identifying winners and losers.
Q. So will the governments create their own digital currencies?
R. In the next 20 years most of the governments will probably offer their citizens digital currencies. The physical money will continue to exist, but only in small denominations. Think $20 notes or smaller. Besides, the tangible money will continue to play its role because it is more suitable for some transactions and provides for privacy.
Q. What does the future hold for the cryptocurrencies?
R. If one analyses the long history of currencies, the usual dynamics is that the private sector is the first to innovate, but at some point, the governmental regulation comes into play They cannot allow anonymous cryptocurrencies on big scale, since it will greatly obstruct the tax collection and abiding by laws and regulations. It is impossible for administrations to stop the people from trading with them completely, but they can indeed make it virtually impossible to use them with merchants, in commerce or bank transactions. If it is not easy to use for acquisition of some common things, its value is very limited. Besides, different governments need to control their own currencies in order to confront financial crises, wars and pandemics.
Q. Can these currencies destabilize the western economies?
R. Absolutely not. The governments have sufficient mechanisms to deal with it. Currently they lag behind in the technological race. Mind you, although the cryptocurrencies face a modest future, the blockchain technology does offer the possibilities of better security and will probably be adopted by a wide variety of platforms.
Q. Some countries seem to welcome the new currencies. Japan, for example has opened its doors to bitcoin. What are the consequences?
R. What Japan did is untenable. They think that by transforming the bitcoin into a legally trading currency, they can turn into the fintech [enterprises that use technology to offer financial services] centre and avoid its slow decline in competition with China. But they will most likely turn into the world leader in money laundering. Switzerland of fintechs. I think that other nations will force Japan to abandon this idea.
The original interview appeared in the Spanish press “El Pais” on 26/11/2017
