Nobel Prize-winning economist Joseph Stiglitz says that Bitcoin creates no value for society and only works by getting around the role of the government in controlling currency.
It should be outlawed, he said.
Stiglitz, who teaches at Columbia University, is a former senior vice president and chief economist of the World Bank. He shared the Nobel Prize in Economics in 2001 for creating models that analyze “markets with asymmetric information.”
In an interview with Bloomberg News, Stiglitz expressed his view that Bitcoin is only so successful because it gives its owners the “potential for circumvention, lack of oversight with respect to the government, whose function it is to create and manage currency.”
Besides painting Bitcoin as a dark web application, he demanded it be banned.
“It seems to me it [Bitcoin] ought to be outlawed. It doesn’t serve any socially useful function,” Stiglitz said. “It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down.”
Stiglitz fails to address the underlying breakthrough of blockchain technology to do socially positive things, such as verify carbon credits, raise funds through token sales for solar companies, and provide high speed Internet to the poor.
He also fails to address 2.0 blockchain companies such as Ethereum and its dogged research and development to overcome some of the obstacles that Bitcoin faces.
Stiglitz argues that the value of Bitcoin today is derived from the “expectation of what it will be tomorrow.” That’s a fair assessment of the stock market, real estate, and any other investment.
This unpredictability, combined with the possibility that government could clamp down, could damage the prospects for all cryptocurrencies — or make their development that much more urgent.
Stiglitz helped create a new branch of economics, “the economics of information,” which explores the consequences of information asymmetries and pioneered pivotal concepts such as adverse selection and moral hazard, which have now become standard tools not only of theorists but of policy analysts.
He has made major contributions to macroeconomics and monetary theory, development economics and trade theory, public and corporate finance, theories of industrial organization and rural organization, and theories of welfare economics and income and wealth distribution.
An erudite economist dismissing Bitcoin seems to be textbook establishment response to blockchain overall.
At the recent World Economic Forum in Davos, Switzerland, blockchain technologies were described in an official report as a “mostly negative technological innovation with little positive influence on society.”