Nouriel Roubini: “Why Bitcoin is the Mother of all Scams”

This year’s CV Blockchain conference in Davos had interesting topics and speakers. While many representatives from the Blockchain industry presented the latest developments in various areas, economist Roubini was extremely critical of the developments. Just as the promising discussion round on “Decentralized Finance” (DeFi) was concluded with promising prospects for the future and a mood of optimism regarding the transformation of the financial market was spreading throughout the conference, the well-known economist Nouriel Roubini entered the panel and created a strong headwind with his statements. Roubini’s all-round blow against crypto-currencies and blockchain Roubini, who had already been critical of Bitcoin before, took off for a sweeping blow against the whole crypto-currency and blockchain development. Unimpressed by the previous discussions, he was the first to unload against Bitcoin. According to Roubini, Bitcoin, with its accompanying volatility, failed to fulfil one of the most important monetary functions: the representation of a unit of account e.g. to be able to value goods. Roubini whent on to claim that Bitcoin was also not suitable as a store of value. The architecture of the protocol is also unsuitable for handling payment transactions quickly and efficiently. In general, the Blockchain technology is anything but a scalable technology. Centralized versus decentralized Roubini conveyed his belief that the future of digital value transfer and global payment processing would and must take place via centralized services. For example, Alipay, a central private blockchain set to be used by Baidu, or upcoming digital central bank issued currencies (CBDC) would dominate this field in the future. It would be naive to believe that decentralized crypto-currencies would be widely adapted for everyday use. Roubini also doubted the decentralized nature of Bitcoin and Ethereum. While Bitcoin is dominated by Chinese miners, Vitalik Buterin would control the events around Ethereum. If a blockchain protocol was no longer acceptable, it would be “forked“, which was further evidence of a need for central powers. Fintech versus blockchain According to Roubini, blockchain was just a fashionable term that would soon disappear again. In relation to Fintech, Roubini claimed that the future focus of blockchain use would be based on technologically advanced centralized services and applications. Distributed Ledger Technology (DLT)” is and always shall be inferior to central databases due to its structure. Companies such as Visa have already invested “several billions” and yet have not implemented the technology. Data protection and privacy In the panel discussion that followed, which included the topic of data protection, the economist missed no opportunity to vilify blockchain-based solutions for privacy protection. Again, Roubini preferred central service providers, such as internet companies and governments, to blockchain. Even one panelist’s argument that cash has important privacy benefits was countered by Roubini’s argument that cash is a phase-out model. For Roubini, centralized systems and government must control data and money-supply. An event filled with contrasting opinion To be fair, it must be added here that Nouriel Roubini’s sweeping blow against block chain and crypto-currencies took place virtually in a monologue. There was undoubtedly a number of high-quality speakers in Davos who could have refuted some of Mr. Roubini’s arguments. Nevertheless, the critical voice during the CV Summit meeting was a welcome change and ultimately helped to form a differentiated opinion. Further panel discussions held at this year’s CV Summit on the topics of DeFi and “Banking on Crypto” in Switzerland will be covered in an upcoming mini-series. * Originally published in German at

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The CVJ editorial team consists of crypto experts, active in different areas around the blockchain technology. In cooperation with selected authors, CVJ.CH provides a high-quality resource around the distributed ledger technology. Independent and up-to-date reporting according to journalistic standards as well as educational content around the topic blockchain, rounds off the offer. 

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