Bitcoin is nothing more than a regular economic bubble that will eventually burst, the American economist, professor of Columbia University Jeffrey Sachs writes in the Boston Globe.
Currently, about 16.8 million bitcoins are in circulation, which at a current price of around $ 14,000 gives a total value of about $ 240 billion compared to $ 16 billion in early 2017, Sachs recalls. “It is difficult to consider the growth of bitcoin prices differently than as a bubble, which eventually bursts,” the scientist emphasizes.
According to him, under 14-fold increase in the cost of bitcoin in the past year, there are no real grounds. The market price of crypto currency is determined by people’s belief that bitcoin is worth something, the economist points out.
Supporters bitcoin argue that the crypto currency is able to surpass the dollar, as it offers anonymity and protection from erroneous monetary policy, since the emergence of new bitcoins is determined by the algorithm, and not by the central bank, Sachs writes.
However, defenders of the crypto currency lose sight of the fact that the dollar and other national currencies are legal tender, through which they pay taxes or pay off debts. No state allows and will hardly ever allow paying taxes in bitcoins, as this will undermine the so-called seigniorage – the income from the issue – and will reduce the control over monetary circulation. Nobody is obliged to take Bitcoin in payment of a debt in national currency, the economist emphasizes.
The anonymity of bitcoin in practice is also his weakness, Sachs believes. States want to control the financial flows that are necessary to combat economic crime, tax evasion and terrorism, and they will not voluntarily give up these opportunities. Some countries have already adopted or are taking measures aimed at regulating the circulation of the crypto currency, which is most likely to cause a fall or even a collapse in the cost of bitcoin, although the exact moment of this collapse can not be predicted.
Thus, the most likely reason for the popularity of this crypto currency is the desire of people to get rich quickly, which more than once led to sad consequences, concludes the economist.
Bitcoin is the most expensive and most famous crypto currency in the world with a capitalization of about $ 254 billion. The first launch of bitcoin occurred on January 3, 2009, currently its price exceeds $ 15,000.
