People have always been skeptical of Bitcoin, reluctant to think beyond traditional money and investment systems. However, as Bitcoin gained prominence, and with homegrown business groups announcing plans to launch their own versions, people began to embrace it. Yet, a recent claim by Nobel-winning economist Eugene F. Fama has shocked the world.
What Economist Eugene F. Fama Said
Bitcoin saw a 9% drop in its price recently. However, analysts believe the crypto market is still adjusting to the recent pro-crypto policies under US President Donald Trump, which could potentially drive the price up in the near future.
But, a well-known Nobel Prize-winning economist, Eugene F. Fama has predicted that Bitcoin, which is currently the most popular cryptocurrency in the world, may lose its relevance or usefulness within the next decade. The economist suggests that Bitcoin could become obsolete or fail in the future.
“Cryptocurrencies are such a puzzle because they violate all the rules of a medium of exchange,” Fama explained during an interview on the Capitalisn’t podcast with hosts Luigi Zingales and Bethany McLean. “They don’t have a stable real value. You know, they have highly variable real value. That kind of medium of exchange is not supposed to survive.”
Why Fama believes Bitcoin To Go Zero?
Fama, who is also known as the ‘father of modern finance’ is skeptical about the fundamental contradictions in Bitcoin’s design. He believes that the biggest flaws will lead to its destruction
- Highly unpredictable– Businesses find it unreliable for everyday transactions.
- Unlike traditional money, Bitcoin’s value is dependent on demand alone. If that fades, price will also go down
- As the Bitcoin is not a real currency- Payments cannot be made; It fails to qualify as money
Is Bitcoin A Digital gold?
The critics strongly disagree with Fama’s arguments, pointing out that Bitcoin is more than just a currency. They argue that it is evolving into a store of value similar to “digital gold,” meaning it is being seen as a long-term asset rather than just a medium of exchange. Fema said that, “it is only digital gold if it has a use. “If it doesn’t have a use, it’s just paper. Not paper, it’s air, not even air.”
“They don’t have a stable real value. They have highly variable real value. That kind of a medium of exchange is not supposed to survive,”
Fama won the Nobel Prize in economic sciences in 2013, alongside economists Lars Peter Hansen and Robert J. Shiller for their work on asset prices.
Current Price Of A Bitcoin
Bitcoin is currently trading at a price near $96,731, according to CoinGecko. Meanwhile, the global market cap for crypto has crossed $3.15 trillion. The world’s biggest cryptocurrency, hit a three-week low of $91,441.89 overnight and stood at $95,730.35 at 0941 GMT, down 6.2% three days back.
