According to Nobel Prize-winning economist Robert Shiller, it is likely that bitcoin will “totally collapse.”
The economists said in a television interview that the case of “tulip mania” that took place in the Netherlands centuries ago is remined to him by the rise and dynamics of bitcoin.
It is not just in bitcoin, but there are “bubbles everywhere,” said the Yale University professor. He added t that he “doesn’t know what to make of bitcoin ultimately.”
“It has no value at all unless there is some common consensus that it has value. Other things like gold would at least have some value if people didn’t see it as an investment,” Shiller said in the interview.
Shiller is also scheduled to speak at the World Economic Forum in Davos, Switzerland, next week.
“It reminds me of the Tulip mania in Holland in the 1640s, and so the question is did that collapse? We still pay for tulips even now and sometimes they get expensive. (Bitcoin) might totally collapse and be forgotten and I think that’s a good likely outcome but it could linger on for a good long time, it could be here in 100 years.”
There was a huge surge and a sky rocketing of the prices of the tulip flower during the tulip craze in the Netherlands which took place in the 17th century. The result of this abnormal rise in prices of the flower was a crash of the market in 1637. The developments and the happenings in the bitcoin market have been linked to that tulip bubble by a number of economists including Paul Donovan at UBS’ wealth management division.
These comments in the interview by Shiller was made prior to the huge sell off that took place earlier this week in bitcoin as well as other digital coins. Shiller had bene awarded the Nobel Prize for Economics in 2013 for his work on asset prices and inefficient markets.
According to CoinDesk, there has bene more than a 1000 per cent hike in the open market price of bitcoin in the last one year and its price at one time touched $19,000. CoinDesk is a private agency that keeps a track of the prices of multiple virtual currencies in the various cryptocurrency exchanges that include Bitstamp, Coinbase, itBit and Bitfinex. And Shiller is not the first noted economist to come out in the open against bitcoin and the likes.
Bitcoin was termed as “fraud” by J.P. Morgan CEO Jamie Dimon. On the other hand Warren Buffett, the CEO of Berkshire Hathaway had said that the cryptocurrency will “come to a bad ending”.
(Adapted from CNBC.com)