Yale economist and Noble Laureate, Robert Schiller expresses his scepticism about cryptocurrencies
The Old Allure of New Money, a blog by Robert Schiller, a prominent Yale economist and a Nobel Laureate refers cryptocurrency as “Cincinnati Time Store.” In the blog, it is evident that he regards cryptocurrencies as a failed experiment in the field of currencies. He is, indeed, sceptical and apprehensive about the future of cryptocurrency which may turn out to be a failure.
Before this, renowned investors like Warren Buffett has taken on cryptocurrency. Yet, the warnings could not diminish the spirit of the crypto enthusiasts. The hype over bitcoins and other cryptocurrency continues to remain intact.
Shiller admits that these kind of experiments to launch new currencies have been prevalent since 19th century. Shiller has reached the zenith and received international recognition by his warning pertaining to dot-com bubbles and housing. This implied to the failed endeavours for issuing “time money” as substitute to gold in the first half of 19th century.
His lack of faith in digital currencies is explicitly presented by juxtaposing them with “Cincinnati Time Store.” It was engaged in selling merchandise in work units which consequently, shut down in a span of three years.
After a century, during the times of Great Depression a dollar was coined by electricity. Unfortunately, this experiment also met the same result.
Referring to these failure experiments, Shiller in his blog stated, "None of this is new, and, as with past monetary innovations, a seemingly compelling story may not be enough."
He has expressed, "Each of these monetary innovations has been coupled with a unique technological story."
Schiller is acquainted with such kind of revolutionary experiments and the hype generated in the initial phase. He realises that with time, such hype among the masses declines. in the blog, he states "all are connected with a deep yearning for some kind of revolution in society."
— Robert J Shiller (@RobertJShiller) May 21, 2018
In his blog, describing cryptocurrency he wrote,“The cryptocurrencies are a statement of faith in a new community of entrepreneurial cosmopolitans who hold themselves above national governments, which are viewed as the drivers of a long train of inequality and war.”
In his perception, cryptocurrencies including bitcoins possess no difference. The digital currencies were creation of the entrepreneurs who, “hold themselves above national governments, which are viewed as the drivers of a long train of inequality and war."
The economist of Yale University has even clarified that due to the mystery hovering bitcoins, the inclination of the general mass enhances. He made it clear that the mechanism and concept of cryptocurrency can be comprehended only by the individuals with computer science knowledge.
He wrote, "Practically no one, outside of computer science departments, can explain how cryptocurrencies work, and that mystery creates an aura of exclusivity, gives the new money glamour, and fills devotees with revolutionary zeal," Shiller said. "None of this is new, and, as with past monetary innovations, a seemingly compelling story may not be enough."
The excessive hype among the public is linked to the sudden increase in bitcoin valuation. Bitcoin, the first and the most hyped cryptocurrency touched the mark of $20k in 2017 before a steep decline in 2018. Previously, due to the volatile nature he expressed his scepticism and referred it as a speculative bubble.
(Image source: Google)
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