Bitcoin

What Does Dr. Doom’s Statement Mean For Bitcoin?

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Nouriel Roubini is an academic economist who predicted the 2008 financial crisis – and he now decries blockchain technology as a bubble and a scam. Roubini’s criticisms of blockchain are myriad, and not entirely baseless. So does his current stance against cryptocurrency mean that Bitcoin and altcoins are truly doomed? How can you make sure your investment is not only safe from cybercrime in your Bitcoin wallet but also from a crash in value?

Roubini’s Problem(s) With Crypto

Roubini's claims have been called exaggerated
Roubini’s claims have been called exaggerated

Where to begin? Nouriel Roubini basically says that cryptocurrency is a failure in every regard. He says that smart contracts are buggy and unenforcible; decentralised systems are unproven and vulnerable; altcoins have lost 95% of value, and they’ll lose 95% more!

It’s true, blockchain is not a fully proven technology, but almost every one of Roubini’s claims seems quite exaggerated. In a recent invective, Roubini called Vitalik Buterin a scammer and a billionaire (claims that Vitalik quickly and calmly proved false). In other statements, Roubini says that “no companies” use blockchain, when in fact IBM (Stellar), Royal Bank of Canada (Ripple), and Walmart (Ripple) all use blockchain systems (to name just a few).

Roubini further claims that blockchain is inherently unscalable. This is a controversial position because, as of yet, he’s right. The Bitcoin and Ethereum blockchains are arguably slow, although there are ongoing efforts made to change this. On the other hand, platforms like Ripple are already very fast. Roubini’s decision to group all blockchain projects together and to inveigh against them with a single set of highly generalised observations means he’s likely to overlook points that are contrary to his own bias.

The Relative Value of Financial Gurus

Blockchain is constantly developing
Blockchain is constantly developing

It’s a popular saying in finance that “experts have predicted 15 of the last three financial recessions.”. This is to say that there are many “Dr Dooms” professing financial meltdown at any given time. Sooner or later, like the broken clock that’s right twice per day, one of them will be right.

On the other hand, Roubini’s anticipation of the 2008 crisis was based on insightful observations. He predicted that the crisis would result from a bloated housing sector. This turned out to be correct. However, as Nassim Taleb argued in “Black Swan”, global markets are so deeply complex that they’re simply beyond the comprehension of any single person. While an individual might “get it right” in one case, this doesn’t mean that they also are correct in all other cases – or that they are an oracle for future events.

People trying to understand the potential value of cryptocurrency should expose themselves to many different voices. It would be unwise to shut out the entirely critical thinkers like Roubini just as it would be to take their dire warnings as the final authority.

Global industry, regulators, users, and developers still seem cautiously optimistic about the potential of blockchain, cryptocurrency, and decentralised systems. Just as all new technologies take years to prove their value on enormous scales, blockchain still needs time to develop. During this time, it could also prove to be an incontrovertible failure. Only time will tell.

In the meantime, we’ll continue to expose you, dear reader, to a variety of opinions on this exciting topic. At the same time, we’ll work to contextualise the opinions of both the doomsayers and the evangelists. It’s likely that neither will be entirely correct.

(*Information in this article should not be taken as investment advice.)

Featured image source: Pixabay

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