Bitcoin more likely to belly-flop than see further growth – economist
In a decade, the world’s number one virtual currency, bitcoin, will probably see a dramatic drop due to its limited range of uses, according to Harvard University professor and economist Kenneth Rogoff.
“I think bitcoin will be worth a tiny fraction of what it is now if we're headed out 10 years from now... I would see $100 as being a lot more likely than $100,000 10 years from now,” the economist told CNBC.
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Rogoff, the former chief economist at the International Monetary Fund (IMF), said that the potential plunge would be caused by a restricted range of uses for digital currencies in general and bitcoin in particular. “Basically, if you take away the possibility of money laundering and tax evasion, its actual uses as a transaction vehicle are very small,” said Rogoff.
Though cryptocurrencies are closely associated with hidden, often illegal activities, numbers reflecting the rate of illicit transactions or other outlawed activities vary. The level of illegal transactions in bitcoin dropped to 20 percent in 2016 and was ‘significantly less than that’ last year, according to the president of Blockchain Intelligence Group Shone Anstey, as cited by the media.
The number of daily confirmed bitcoin transactions tumbled to its lowest in two years despite record-low commission fees, according to data revealed by bitcoin block explorer and cryptocurrency wallet service Blockchain.info.
According to Rogoff, active government regulation of crypto markets will drag prices down, though it will take watchdogs across the globe some time to develop a framework to control the sector.
“It really needs to be global regulation. Even if the US cracks down on it and China cracks down, but Japan doesn't, people will be able to still launder money through Japan,” the economist said.
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Rogoff stressed that authorities hadn’t launched decent bitcoin regulation yet because of the anticipation of the blockchain technology, which is behind the digital currency. “They want to see the technology develop,” he said, adding that the private sector had “invented everything” in the history of currency, from standardized coinage to paper money.
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