Bitcoin has made waves this week for topping the $10,000 mark for the first time in its relatively short history. On Wednesday, the cryptocurrency skyrocketed to an all-time high of $11,363.99, before falling more than 15 percent to $9,295.79.
While a lot of people remain high on Bitcoin, there are several prominent economists who believe the digital currency is simply, just a tease. One of Bitcoin’s most notable detractors is Nobel Prize-winning economist Joseph Stiglitz, who recently appeared on Bloomberg Television to explain why Bitcoin “ought to be outlawed.”
Stiglitz’s View On Bitcoin
Stiglitz, who won the Nobel Memorial Prize in Economic Sciences in 2001, believes Bitcoin’s popularity is due to a large amount of speculation and circumvention.
“Bitcoin is successful only because of its potential for circumvention, lack of oversight,” Stiglitz said. “So it seems to me it ought to be outlawed. It doesn’t serve any socially useful function.”
The award-winning economist also believes the current run-up in Bitcoin’s value is unsustainable and believes it is in the midst of a classic economic bubble.
“It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,” he said. “The value of a bitcoin today is expectations of what the bitcoin is going to be tomorrow.”
Despite plenty of signs the digital currency is currently in an asset bubble, buyers haven’t shied away from taking the financial risk. bitcoin surged to over $11,000 a coin just a few hours of hitting the $10,000 mark for the first time. However, Stiglitz issued another warning to viewers—Washington could nip Bitcoin in the bud at any moment.
“If the government says ‘the reason Bitcoin is being used is circumvention,’ they could close it down at any moment,” he said. “And then it collapses.”
Final Hit: Nobel Laureate Explains Why Bitcoin ‘Ought To Be Outlawed’
Despite his reservations about Bitcoin, Stiglitz did note that he believes it’s time to move on from paper money and start utilizing a digital currency.
“Let’s move away from paper into the 21st century of a digital economy,” he said.
One of the biggest benefactors of a cryptocurrency would be the rising cannabis industry.
Perhaps the biggest issue facing states that have recently legalized recreational cannabis is the fact that they cannot store their money in traditional banks. Since cannabis is still considered a Schedule I narcotic on a federal scale, banks don’t want to take the risk of associating themselves with the industry.
The state of California has toyed with the idea of state-sanctioned banking, as well as armored cars for the transport of cash, but both of those solutions would require more funding and manpower than a decentralized cryptocurrency such as Bitcoin.