Bitcoin To 'Collapse,' Blockchain To Live On - Kenneth Rogoff
(Kitco News) - Bitcoin’s technology will outlive the popular digital currency, which in turn will collapse due to regulatory pressures, said one famed economist.
“My best guess is that in the long run, the technology will thrive, but that the price of bitcoin will collapse,” said Kenneth Rogoff, Harvard economist and former chief economist at the International Monetary Fund (IMF), in an article for The Guardian and Project Syndicate.
Bitcoin saw unbelievable gains since the start of the year, up around 365%. It also hit a one-month high at the start of the week, breaching the $4,900 level. On Wednesday afternoon, bitcoin was last seen at $4,833.60, up 1.17% on the day.
The technology that Rogoff discusses in his commentary is known as the blockchain, which refers to encrypted distributed ledgers that cryptocurrencies operate on that make all transactions anonymous and not overseen by a central authority.
According to the economist, the demise of bitcoin will come from governments trying to control the crypto market.
“The long history of currency tells us that what the private sector innovates, the state eventually regulates and appropriates,” he noted. “I have no idea where bitcoin's price will go over the next couple years, but there is no reason to expect virtual currency to avoid a similar fate.”
China is currently at the forefront of the move to regulate. Last month, the Chinese government banned initial coin offerings (ICOs) and shut down some cryptocurrency exchanges.
Also, Chinese authorities increased their efforts to oversee bitcoin exchanges, with the People’s Bank of China (PBOC) creating a task force that could conduct inspections and enforce an introduction of anti-money laundering systems.
On Tuesday, Russian President Vladimir Putin also spoke in support of regulating cryptocurrencies.
“The use of cryptocurrencies bears serious risks,” such as money laundering, tax evasion and funding for terrorism, Putin said at a meeting of top finance officials in Sochi, Russia.
Putin also called for construction of a new “regulatory environment” to protect the business and state interests. But, he stopped short of banning anything, noting that “it’s important not to put up too many barriers.”