Renowned economist Eugene F. Fama, who has been awarded the Nobel Prize, foresees the inevitable downfall of bitcoin. He believes the likelihood of bitcoin surviving is extremely low and he regards it as having no value.
Renowned economist predicts that Bitcoin is on the verge of a significant decline.
Eugene F. Fama, a renowned economist who received the Nobel Prize for his research on asset pricing and the efficient market hypothesis, predicts that bitcoin will eventually have no value.
During an appearance on the Capitalisn’t podcast, Fama was queried about the possibility of bitcoin’s value plummeting to zero over the next ten years. He replied, “I’d put the probability at nearly 100%. That being said, I still have faith in traditional monetary principles – although I could be mistaken.” Fama also expressed caution regarding a proposal floated by President Donald Trump to designate bitcoin as a strategic reserve, a move that some speculate could boost the cryptocurrency’s value.
The Nobel Prize winner showed doubt about the lasting success of cryptocurrency, claiming that economic principles indicate it may not be sustainable. He highlighted bitcoin’s significant price fluctuations as a core issue, stating that traditional monetary theory suggests it may not last.
He emphasized that being labeled as digital gold is not appropriate unless the item serves a purpose. Without a practical function, it is essentially worthless and holds no value.
Fama doubts the value of bitcoin because it is based on speculation rather than inherent worth. He pointed out that the price of bitcoin is determined solely by demand due to its fixed supply, leading to high volatility. He expressed concern that conducting business with bitcoin could be risky because of its fluctuating value. Fama argued that for an asset to hold its value, it must have a practical use, indicating that bitcoin cannot replace traditional currency.
When questioned about the possibility of a bitcoin bubble, Fama refused to make a concrete forecast. “I’m unable to forecast when it will collapse, although I’m rooting for it to do,” he stated. The economist cautioned that if bitcoin maintains its value, it may potentially disrupt core economic principles, leading him to conclude:
