Bitcoin Bubble will burst and should be banned according to Nobel Laureate

Is bitcoin a bubble? Another tulip mania?

According to Professor Joseph Stiglitz, Nobel Prize Winner for Economics – it is absolutely – you’ve heard that before but here are some of the details:

1. Bitcoin is primarily for illicit activities – Who would use bitcoin ? Primarily for funding or trading illicit activities – eventually if it becomes prominent enough and associated with high profile illicit activities – governments will find reasons to clamp down on it – Governments haven’t clamped down on it but they may do so very soon.

2. It has no intrinsic value – it is artificially created demand as even though the number of bitcoins in circulation are limited – there is no reason why they should stick to bitcoin – there is no real underlying value – and that’s when eventually they will move on to other investments.

3. Finally – the underlying block-chain technology will eventually force some level of transparency by governments which will mean that this currency’s appeal will die out to its core participants.

However, his view may be motivated by vested interest regarding his own back catalog of material supporting a monetary system that increasing numbers are starting to view as an establishment extortion racket! They cultivated their intellectual supporters, polished their egos with nice prizes, etc.

Bitcoin being a crypto”currency” derives its value from: 1. Its value against other currencies and 2. Its value against goods & services it can be exchanged with. But its speculatively driven ballooning price is a big worry because it may not have a proportional relationship with money as specified in the quantity theory of money. Maybe after it burst we may find its true value. This happened when Tech Stocks went crazy not too long ago.

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