Summer Madness as Economists Predict Bitcoin Demise, Call it a ‘Fiat’

Bitcoin Economics

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 25, 2023

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Midsummer appears to be a time for conventional economics experts to make bold claims about the nature – and future of – bitcoin (BTC), with one expert claiming that BTC’s value will soon peter out to nothing, and Federal Reserve Bank of New York analysts claiming that there’s “nothing new” about bitcoin.

The first claim came from investor Jim Rogers, the head of Beeland Interests and the co-founder of the Quantum Fund and Soros Fund Management. Rogers’ personal fortune is said to be worth around USD 300 billion.

Speaking to Japanese media outlet Asahi, Rogers said that BTC and other cryptocurrencies would soon decline and “eventually” would “fall to zero.”

A lack of military clout, said Rogers, would ultimately lead to bitcoin’s undoing.

“Governments have something that crypto doesn’t: guns.”

Rogers added that conventional fiats have the backing of governments and their armies – something that BTC could never even dream of aspiring to.

He added,

“If cryptocurrency succeeds in becoming real money, rather a speculative tool for gambling as it is today, governments will simply wipe it out by making it illegal.”

And while digital tokens may survive in some form, he remarked, they would become centralized and government-controlled.

Over in the Big Apple, meanwhile, NY Fed authors Michael Lee and Antoine Martin conceded, in a blog post, that “bitcoin may be money.”

But they added a caveat stating that BTC “it is not a new type of money.” Instead, the entire financial system is built on nothing but belief, they opined. Bitcoin, they stated, was no exception, and was just a “fiat without legal tender status.”

They conceded,

“However, the ability to make electronic exchanges without a trusted party – a defining characteristic of bitcoin – is radically new.”

Lee and Martin’s claims appear to have struck a nerve for some crypto advocates on Twitter, with one accusing the NY Fed of “ignorance” and “misclassification,” and opining “no one is enforcing [bitcoin’s] value at the point of a gun.”

Despite growing numbers of bitcoin bulls, many well-known traditional economics and investors remain fairly skeptical about it. The list of well-known crypto skeptics includes Warren Buffett, Nouriel Roubini, Paul Krugman, Joseph Stiglitz, Robert Shiller, and many more mainstream personalities, including the current U.S. president Donald Trump, who allegedly wanted to go after bitcoin in 2018.