A Cornell University economics professor says the promise of decentralized funding (defi) using blockchain technology is real, but Bitcoin may not last as long. Nonetheless, he admitted that Bitcoin “really started a revolution that we could all benefit from, either directly or indirectly”.
Economics professor doubts the future of Bitcoin, praises Defi
Eswar Prasad, Professor of Economics at Cornell University, spoke about bitcoin, cryptocurrencies, blockchain technology, decentralized finance (defi) and central bank digital currencies in a recent interview with CNBC.
Prasad, author of The Future of Money: How the Digital Revolution is Transforming Currencies and Finance, is Nandlal P. Tolani Senior Professor of Trade Policy and Professor of Economics at the Charles H. Dyson School of Applied Economics and Management at Cornell University. Previously, he was Head of Financial Studies in the Research Department of the International Monetary Fund (IMF) and Head of China Department at the IMF.
Noting that blockchain technology will be “fundamentally transformative” in finance and the way we conduct our daily transactions, he said:
The promise of decentralized funding using blockchain technology is real, but Bitcoin itself may not last long.
The economics professor explained: “Bitcoin’s use of blockchain technology is not very efficient. It uses a validation mechanism for environmentally damaging transactions that doesn’t scale very well. “
He claimed that there are newer cryptocurrencies that use blockchain technology far more efficiently than Bitcoin.
“With all assets, the question is where the fundamental value proposition lies,” he continued, adding:
Given that Bitcoin doesn’t do well as a medium of exchange, I don’t think it will have any fundamental value other than the investor’s beliefs.
He went on to discuss currency competition and stablecoins. “There’s an interesting element of currency competition that it sparked. There are now stablecoins that could in principle create more effective opportunities for basic transactions, ”he said.
The professor added that cryptocurrencies “started a fire among central banks to contemplate issuing digital versions of their own currencies”.
Professor Prasad stated that central bank digital currencies (CBDCs) “could in many ways be good for providing an additional payment option, an inexpensive payment option accessible to everyone, increasing financial inclusion and possibly increasing financial stability”.
He concluded:
As much as you might not like Bitcoin, it really started a revolution that we could all benefit from, either directly or indirectly.
Do you agree with Professor Eswar Prasad? Let us know in the comment section below.
Kevin Helms
Kevin, a student of Austrian economics, found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the interface between economy and cryptography.
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