advertisement
advertisement

Economist: bitcoin has a ‘decent probability’ of going to zero

Economist: bitcoin has a ‘decent probability’ of going to zero
[Photo: Icons8_team/Pixabay]

On Monday Joe Davis, a senior economist at the Vanguard Group, posted an interesting op-ed that is sure to scare the living daylights out of bitcoin investors. In it, Davis wrote that there’s a high likelihood that bitcoin, which currently sits around $8,200, is going to become worthless. Yep, as in zero dollars per coin. As for why, Davis says:

The investment case for cryptocurrencies is weak. Unlike stocks and bonds, currencies generate no cash flows such as interest payments or dividends that can explain their prices. National currencies derive their prices from the underlying economic activity of the countries that issue them. Cryptocurrency prices, on the other hand, are generally not based on economic fundamentals. To date, their prices have depended more on speculation about their eventual adoption and use. The speculation creates volatility that, ironically, undermines their value as a currency.

But that’s not to say Davis is a Debby Downer about everything related to bitcoin. He actually thinks blockchain, the underlying technology of bitcoin and other cryptocurrencies, will have lasting value:

I’m enthusiastic about the blockchain technology that makes bitcoin possible. In fact, Vanguard is using such. As for bitcoin the currency? I see a decent probability that its price goes to zero.

advertisement