According to an economist at Cornell University, the promise of blockchain-based decentralized finance is possible but it may not be realized for long. Nonetheless, he admitted bitcoin “has really set off a revolution that ultimately might benefit all of us either directly or indirectly.”
A Professor of Economics Doubts the Future of Bitcoin and Praises Determination
In a CNBC interview published Friday, Eswar Prasad (Professor of Economics at Cornell University) discussed bitcoin, cryptocurrencies and blockchain technology.
Prasad, the author of “The Future of Money: How the Digital Revolution is Transforming Currencies and Finance,” is the Nandlal P. Tolani senior professor of trade policy and professor of economics at the Charles H. Dyson School of Applied Economics and Management at Cornell University. He previously served as chief of the financial studies division in the International Monetary Fund (IMF)’s research department and head of the IMF’s China division.
Noting that blockchain technology will be “fundamentally transformative” in finance and in the way we conduct our day-to-day transactions, he opined:
Although the promise of blockchain-based decentralised finance is real, bitcoin may not be around for much longer.
The professor of economics explained: “Bitcoin’s use of the blockchain technology is not very efficient. It uses a validation mechanism for transactions that is environmentally destructive that doesn’t scale up very well.”
He claimed that newer cryptocurrency use blockchain technology more effectively than bitcoin.
“With any assets, the question is where is the fundamental value proposition,” he continued, adding:
Given that bitcoin is not serving well as a medium of exchange, I don’t think it’s going to have any fundamental value other than whatever investor’s faith leads it to have.
He then discussed currency competition as well as stablecoins. “There is an interesting element of currency competition that it has set off. There are stablecoins now that could, in principle, create more effective ways of transacting in basic ways,” he described.
The professor added that cryptocurrencies have “lit a fire under central banks to start thinking about issuing digital versions of their own currencies.”
Professor Prasad explained that central bank digital currencies (CBDCs) “could be good in many ways in terms of providing an additional payment option, a low cost payment option that everybody has access to, increasing financial inclusion, and potentially also increasing financial stability.”
Although you may not like Bitcoin, the revolution it started has been a benefit to all of us.
Are you in agreement with Professor Eswarprasad? Please comment below.
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