Writing in the midst of the recent collapse in crypto market prices, the current professor of economics and public policy at Harvard University, Kenneth Rogoff, suggested that the “overwhelming sentiment” among crypto advocates was that the overall “cryptocurrency market capitalization could explode over the next five years, rising to $ 5- 10[ trillion]”
The historic volatility of the emerging asset class, he admitted, does indeed indicate that Bitcoin’s decrease from its all-time highs of $20,000 to less than $3,500 today is “no cause for panic.”
Nevertheless, the economist dismissed Bitcoin’s “crypto-evangelist” view as crypto gold, calling it “nutty,” stating that its long- term value is “more likely to be $100 than $100,000.” Rogoff argued that Bitcoin’s use, unlike physical gold, is limited to transactions – making it susceptible to a bubble- like collapse.
In addition, the energy- intensive verification process of the cryptocurrency is “much less efficient” than systems based on “a trusted central authority such as a central bank.”
Even if Bitcoin is not fundamentally “worth zero,” Rogoff contended that national governments and “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.”
In his opinion, this puts Bitcoin in a twofold bind with effects on its future value: “take away near-anonymity and no one will want to use it; keep it and advanced-economy governments will not tolerate it.”
While the economist pointed out that governments around the world may in course of time “regulate and appropriate” the innovations of the new asset class –– as shown by the interest of multiple central banks in digital currency issuance –– he argued that co-ordinated global regulation would eventually seek to “stamp out privately constructed systems,” with merely certain geopolitical outliers as a probable exception:
“The right way to think about cryptocurrency coins is as lottery tickets that pay off in a dystopian future where they are used in rogue and failed states, or perhaps in countries where citizens have already lost all semblance of privacy. It is no coincidence that dysfunctional Venezuela is the first issuer of a state-backed cryptocurrency (the “petro”).”
The argument made by Rogoff that “disgruntled” nation states–Cuba, Iran, Libya, North Korea, Somalia, Syria and Russia–turn to cryptocurrencies under the burden of sanctions has previously been raised by several analysts. A report earlier this fall indicated that the North Korean government “laundered” the crypto into a fiat to evade the United States penalties. According to a report this summer, Iran is going one step further to explore the creation of its own national cryptocurrency.