Paul Donovan, UBS’s Global Chief Economist said that the cryptocurrency bubble may be in its death throes, in his blog post. Donovan was interviewed by CNBC’s show Fast Money over his blog, where he stated that all cryptocurrencies “fatally flawed”.
Donovan titled his blog post as ‘I come to bury Bitcoin, not to praise it’ in which he talks about the rough phase the cryptocurrency market is going through, a bubble which will burst. Donovan called the designers of these currencies brilliant at Maths but they “know nothing about Economics.” Donovan said:
“To be perfectly honest I think anyone with a high school education in economics is been a Bitcoin skeptic right from the start. These things were never going to be currencies, they’re not going to be currencies at any point in the future.”
Donovan added that with a fair understanding of economics, it was clear that the hype created by Bitcoin, just influenced people due to new technology. It was certain that this hype will not result in anything good and will end badly. He thinks that the bankers who left their institutions to join this cryptocurrency space lacked the fundamental understanding of monetary policy.
However, Donovan acknowledged that there was a certain value in the distributed ledger system provided by the blockchain technology, but it failed to showcase any valid use cases at all in cryptocurrencies. When asked about the use of cryptocurrency at places without a proper government, Donovan said:
“If you don’t have a government then society gets a little bit more anarchic and in that situation something like the cryptocurrency does still come through, but the main problem with these things the absolute fundamental flaw is that they’re never going to be a store of value. Every economist knows the store of value is about balancing supply and demand and with crypto currencies you cannot control the supply in response to a drop in demand.”
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Economist Stephen Moore joins project touted to be ‘world’s first decentralized crypto central bank’
Stephen Moore, former member of the Wall Street Journal editorial board and popular economist, recently attempted to join the Federal Reserve. Alas, he was denied the opportunity. Now, the economist is back in the news again.
According to a report by Fox Business, Moore has joined a group of entrepreneurs who plan to kick-start their very own ‘Federal entity’ named “Decentral,” which incidentally will be labelled as the “the world’s decentralized central bank.”
Sam Kazemian, CEO of Decentral, said that the endeavor’s major objective was to create a new type of central bank that would stabilize virtual assets such as Bitcoin and its counterparts. The bank would work on the same lines as the Federal Reserve does for the U.S economy. Decentral plans to carry forward responsibilities in terms of regulating the supply of cryptocurrencies in the market, in the same manner. Apparently, Decentral will also issue its own crypto tokens in the exchange for other digital assets, with the valuation of the token tied to a stable assessment method.
While Moore has been hired as a Chief Economist, it was reported that his role within the company is still “unclear.” Moore said,
“I am really excited about doing this. I hope it makes me rich.”
Moore also drew comparisons between Facebook’s recently unveiled Libra and Decentral’s offer. He stated that the Decentral crypto would offer a payment method that would be pegged to a stable currency and it would present major uniformity and reliability in the digital asset space, which is often divided among other major cryptos.
Moore added that his employment with a cryptocurrency-backed entity did not create a wedge between his work as an economist. In the current scenario, cryptocurrencies have a huge role to play in the economy, in a way not contradictory to Federal Reserve policies, he added.
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