Kenneth Rogoff, currently a Professor of Economics and Public Policy at Harvard University was the chief economist of the International Monetary Fund (IMF) from 2001 to 2003. He has predicted that bitcoin will eventually collapse, although he expects the underlying technology will thrive. He made this prediction in a column he writes on Project-Syndicate titled, “Crypto-Fool’s Gold?”
This is coming at a time when the cryptocurrency has hit epic numbers; the price of bitcoin has grown by 600% in the past 12 months and 1600% in 24 months. It surpassed $4,893/USD on Tuesday, October 10, 2017.
It’s difficult to bet against the bitcoin right now as cryptocurrency optimists project a further increase in coming months. But Rogoff is not a stranger to taking such an opposing stance; he has made a number of improbable predictions that came to pass. Notable is the prediction of the US Housing crisis back in 2001 when people could only expect an upward trend. He also predicted an EU crisis.
His prediction like many others is premised on historical cycles. His book, ‘This Time Is Different’ chronicles the patterns and parallels of Economic Disasters for 800 years. He says that government regulation will eventually get in the way of cryptocurrency as has been the case with other private sector innovations.
“But the long history of currency tells us that what the private sector innovates, the state eventually regulates and appropriates – and there is no reason to expect Virtual Currency to avoid a similar fate.” – Rogoff
We are beginning to see varied government responses to cryptocurrency. With the outright ban in China, acceptance in Japan and Sweden’s e-krona project, a trend is developing. Government regulators are seeking a closely monitored cryptocurrency which goes against a key cryptocurrency cornerstone – it’s near anonymity.
Rogoff was pessimistic that the government would allow huge untaxed transactions be carried out for very long. Instead, they could develop a controlled digital currency against bitcoin and its counterparts.
Rogoff’s work has been refuted in the past. In 2013 economists from the University of Massachusetts accused Rogoff and co-author Reinhart of making serious mathematical errors in their paper “Growth in a Time of Debt”. An EU committee had earlier cited the paper as the basis for further cost-cutting measures.
Have your say in the comment section. Do you think bitcoin will collapse anytime soon?