Economist warns against Bitcoin

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Several international bankers have sounded a warning about the mega risks involved in embracing bitcoin, which this week soared to a new record high of more than $8,000.

“It’s the exact definition of a bubble,” the head of Swiss banking giant Credit Suisse, Tidjane Thiam, warned recently in comments that immediately sparked an uproar on social media among bitcoin’s supporters.

The head of the French central bank or Banque de France, Francois Villeroy de Galhau, warned in the summer: “People are using the bitcoin today are clearly doing it at their own risk and at their own peril.”

Nobel laureate, Jean Tirole, also insisted that the current bitcoin boom was a “bubble”.

“It’s something that has no intrinsic value,” he said on the sidelines of a conference in Paris this week.

“It could collapse from one day to the next. I would be completely against French banks, for example, investing in bitcoin.”

“Bitcoin? It’s about ‘Uber-ising’ currency, about not having a central bank that decides the price,” said Ludovic Subran, chief economist at credit insurer Euler Hermes.

Bitcoin is not regulated, but is traded on specialist platforms. It has no legal exchange rate and no central bank backing it. Launched in 2009 as a bit of encrypted software written by someone using the Japanese-sounding name Satoshi Nakamoto, bitcoin is controlled and regulated by its community of users.

Economists generally are of the view that Bitcoin is the monetary equivalent of Uber, since it bypasses central bank regulation and can be used for illicit purposes and are highly speculative by nature.

 


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