Nouriel Roubini, professor of economics at New York University and famous for foreseeing the 2008 financial crisis, has delivered a scathing attack on cryptocurrencies and blockchain.
“Crypto is the mother and father of all scams and bubbles, a bubble that has finally gone bust this year. Blockchain is the most overhyped technology ever and is no better than a glorified database,” Roubini told a US Senate Banking, Housing & Urban Affairs Committee Hearing on Cryptocurrencies and Blockchains.
“This entire asset class is literally imploding now,” Roubini, known as “Dr. Doom,” continued.
“These assets are not currencies. Calling them cryptocurrencies [is] nonsense. They’re not a unit of account, they’re not a means of payment, they’re not a stable store of value. Bitcoin can do only five transactions per second, Visa can do 25,000 per second.”
“Crypto-mining is also an environmental disaster as the system wastes massive amounts of energy,” he said.
“The crypto ideological utopia is a libertarian dream of full decentralisation of all human transactions. No governments, no central banks, no corporations, no banks, no trusted institutions, It’s totally utter nonsense.”
Also speaking before the Senate Committee was Peter Van Valkenburg, Coin Center’s research director, who has a very different view to Roubini.
“It [bitcoin] is working and working without trusted intermediaries, which is amazing,” Van Valkenburg said.
“It’s a computer science breakthrough and it will be as significant for freedom, prosperity and human flourishing as the birth of the internet. And bitcoin is just the beginning.”
Roubini, however, said “Cryptoland” is now subject to the opposite of a libertarian utopia being “massive” centralisation.
“Mining is centralised and controlled by oligopolies in authoritarian countries like China and Russia. Trading is centralised, there’s 99% of all transactions occur on non-secure centralised exchanges that are being hacked on a daily basis,” said Roubini.
“Development is centralised as the technological elite is police, prosecutor and judge. They arbitrarily change the code and fork coins into new ones when things go wrong. And wealth is massively concentrated in Cryptoland. The Gini coefficient of inequality for bitcoin is worse than North Korea. That’s quite an achievement.”
He went on to talk of massive price manipulation, widespread pump and dump schemes, insider trading, and “massive criminality.”
“ICOs [initial coin offerings] associated with security tokens are non-compliant securities that break all securities laws. They are mostly scams and even the SEC [Securities and Exchange Commission] created a fake website to warn investors of such initial coin scams,” Roubini said.
“Utility tokens and widespread tokenisation would mean a return to the Stone Age of barter. Even the Flintstones knew better than crypto as they used clamshells as their own currency.”
“Corporate blockchains or so-called enterprise VLT, are glorified databases and they have nothing to do with blockchain. They are private rather than public, they are permissioned rather than permissionless, they are based on [the] trust of authorities verifying transactions rather than being trustless,” said Roubini.
“They’re not distributed on millions of computers but rather on a few selected controlled ledgers and databases.”
“In summary they claim to be blockchain but they’ve nothing to do with blockchain, and 90% of all corporations experimenting with them have decided that they are no better than traditional databases. If they are more costly and less efficient than data bases they will not use them. Only 1% of CIOs [chief information officers] say that there will be any adoption of VLT in their organisation, and 80% of all CIOs have no interest in this technology,” Roubini added.
“It’s no wonder as no organisation, government, corporation or bank would ever want to put on a public permissionless, distributed trustless ledger all of its transactions with customers and suppliers. It doesn’t make sense and it’s not going to happen.”
Roubini starts speaking at about six minutes and 43 seconds on the video below, and is followed by Van Valkenburg.
Below is a tweet from Roubini.
99% of crypto land is one shitcoin traded for another shitcoin. And the average shitcoin lost 90% or more of its value in the last year. So Crypto Land is Crap Land, a cesspool of lunatics with severe Freudian scatological obsessions that swim 24/7 in their own stinking shit.
— Nouriel Roubini (@Nouriel) October 11, 2018