Roubini recounted his testimony, in which he compared Bitcoin’s 2017 rise to other historical bubbles like Tulip Mania by looking at asset prices three years before the asset's sharp price increase.
“The Dot-Com bubble, the rise [in asset price] was 3x. South Sea Bubble 8 x, Tulip Mania and Mississippi Bubble rising price was 35x,” Roubini said. “In the case of Bitcoin, the rise was 60x.”
Roubini refuted Novogratz’s points on technology bubbles by noting that the assets and speculation tied to the South Sea Bubble, Tulip Mania, and Mississippi Bubbles went away.
Roubini noted that Bitcoin is down 70% since its peak. But he honed in on “Scamcoins,” arguing that 81% of cryptocurrencies were scams, and another 11% were dead or failing. “Only 8% are trading on exchanges and have lost 90% of the value.”
Roubini also argued that the term cryptocurrency is a total misnomer. “To be a currency, you need to be a unit of account. None are a unit of account. It has to be a valuable and scalable means of payment.”
Roubini argued that Bitcoin is not a stable store of value because the price can go up and down 20% in short periods of time. “If you’re a merchant and you accept Bitcoin for payment, in an hour, your profit margin can disappear because of a price change,” he said.
Roubini also raised concerns about manipulation on exchanges – including wash-trading, pump and dump trading and front-running. “This has no future as a currency,” he concluded.
Ethereum – the Industrial Coin?
While the comparisons between Bitcoin and Gold as a better store of value has been a major topic of discussion, the idea that a cryptocurrency can have an industrial use – like silver – is not a subject that has generated much interest.
But Lubin, the co-Founder of Ethereum, noted that a lot of the data had changed over the last four years and that Blockchain has enabled the ability to build an infrastructure based on trust.
Lubin noted that decentralized systems that are based on trust would take time to build. The Ethereum executive said his firm is building layers of the Ethereum ecosystem that bring scalability. This opened up a discussion on the notion that Ether is a coin that has an industrial use.