Economist predicts eventual zero value for Bitcoin: A timeline is provided
Eugene Fama, the renowned “Father of modern finance,” has predicted that Bitcoin will have no value in ten years. Fama stated that cryptocurrencies “violate all the rules of a medium of exchange” on the Jan. 30 episode of Capitalisn’t. He explained that they lack stable real value and have highly variable real value, which goes against the survival of a medium of exchange. Fama, who authored the efficient markets hypothesis in the 1960s, did not guarantee that Bitcoin will be worthless, but when asked about the probability of its value going to zero within ten years, he responded, “I would say it’s close to one.”
The interview began with Fama expressing his disapproval of the term “economic bubble,” as bubbles require a predictable ending, which Fama argues is not possible in the market. When asked if Bitcoin was a bubble, Fama expressed his hope that it would burst. He stated, “I’m hoping it would bust because, if it doesn’t, we have to start all over with monetary theory – it’s gone.” Fama added, “All we thought we know about monetary theory says [cryptocurrency] shouldn’t survive.” These comments have stirred anger within the crypto community.
Fama was also asked about stablecoins, to which he responded that using U.S. dollars on the blockchain “could work” because dollars have a stable real value. He also highlighted the threat of a 51% attack on Bitcoin, stating that every transaction system faces the problem of verification and enforcement of rules.
Fama, who received the Nobel Prize in economics in 2013, also emphasized the benefits of gold compared to Bitcoin, as gold has multiple use cases. He believes that the government’s involvement in the crypto market may accelerate the devaluation of Bitcoin.
It is worth noting that while Fama acknowledged the main surface-level threats to decentralized digital money, he did not express his predictions with utmost confidence. Finance professor Luigi Zingales praised Fama’s open-mindedness and willingness to adapt his views at the age of 86, calling it remarkable.
