Famed economist calls digital currency ‘the mother of all scams’ at US senate hearing
Crypto-traders frequently refer to the hundreds of tokens other than bitcoin as ‘shitcoins’. This, Nouriel Roubini said, ‘is a grave insult to manure’
New York — Crypto-currency critic Nouriel Roubini, the economist famous for foreseeing the 2008 financial crisis, is back in the headlines again, and this time it’s because he’s dissing digital money in front of the US Senate.
In a scathing, prepared testimony for a hearing on crypto-currencies and blockchain on Thursday, Roubini read Bitcoin believers the riot act, calling virtual currencies “the mother of all scams and (now busted) bubbles”. He also fired shots at the technology behind digital tokens, which many believe is what holds the real promise.
“Blockchain is the most over-hyped technology ever,” wrote the New York University professor, who is also chairman at Roubini Macro Associates. “It is nothing better than a glorified spreadsheet or database.”
There were numerous verbal attacks in the 37-page roast. Crypto-traders frequently refer to the hundreds of tokens other than bitcoin as “shitcoins”. This, Roubini said, “is a grave insult to manure.”
Bitcoin’s months-long selloff continued in the hours leading up to the US senate banking committee’s hearing, in which Roubini faces off against crypto-advocate Peter Van Valkenburgh, director of research at Washington-based lobbying group Coin Center. The top digital token dropped as much as 6.9% to $6,080, the lowest level in about two months, amid the broad rout in global equities over the past day.
The truly disruptive innovation underlying bitcoin, Van Valkenburgh said, is the consensus mechanism, or the process by which computers agree on a shared set of data and then record updates to the data.
“Networks powered by public consensus mechanisms mirror the early internet, and may, one day, become as indispensable as the internet in facilitating free speech, competition, and innovation in computing services,” he wrote. “Public consensus mechanisms demand that users place trust in unknown third parties who are economically motivated to behave honestly because they have skin in the game and face competitive pressures.”