According to the former International Monetary Fund (IMF) chief economist and current Harvard University professor of economics and public policy Kenneth Rogoff, Bitcoin and other cryptocurrencies are not more than lottery tickets.
In a Guardian post, Kenneth stated that some people believe that the crypto market is following an irreversible downward trend. According to him, it is quite difficult to say with certainty that the value of cryptocurrencies will fall to zero.
In the article, Kenneth said that Bitcoin is considered as digital gold, but it is unsustainable like gold because it does not have any value, unlike real gold. Bitcoin has no application outside of a monetary setting. Kenneth believes that the massive energy requirement which is required to keep Bitcoin functioning is less efficient than a central banking system. Kenneth further added that strong economies are not adopting cryptocurrencies happily and weak economies and other economies which are affected by other issues such as Somalia, Venezuela, North Korea, and Iran are embracing cryptocurrencies to resolve their issues. This makes it difficult to predict the fate of the digital asset class. Kenneth believes that large economies will not tolerate digital assets for a longer period because of their to facilitate terrorism and money laundering. If cryptocurrencies lose their anonymity, then they will also lose their mass appeal. Kenneth said that
“Regulators are gradually waking up to the fact that they cannot countenance large expensive-to-trace transaction technologies that facilitate tax evasion and criminal activity. At the same time, central banks from Sweden to China are realizing that they, too, can issue digital currencies…When it comes to new forms of money, the private sector may innovate, but in due time the government regulates and appropriates.”
Kenneth further added that he worked on the same kind of problems for over five decades and found that the price bubble which surrounds an intrinsically worthless asset eventually burst. He said,
“The prices of assets that do have real underlying value cannot deviate arbitrarily far from historical benchmarks. And government-issued money is hardly a pure social convention; governments pay employees and suppliers, and demand tax payments in fiat currency.”
He believes, government actions will determine the mass adoption of Bitcoin and other cryptocurrencies.