Lorenzo Arvanitis 12:09 am, Feb 07, 2018 Bitcoin’s days may be numbered, according to Yale economics professor Robert Shiller, who commented on the volatility of the cryptocurrency at the 48th annual meeting of the World Economic Forum in Davos, Switzerland last month. The nobel laureate described bitcoin as an “interesting experiment but not a permanent feature in our lives” during an open session at Davos, arguing that the bitcoin bubble, which reminded him of the Dutch tulip mania centuries ago, seemed likely to burst.
Shiller’s comments, quoted by Paul Krugman ’74 in his New York Times column last week, accompany bitcoin’s recent 50 percent drop in value since its peak in November last year. As Bitcoin continues to tumble, it faces a difficult road ahead.
“Bitcoin uses advanced cryptography methods to achieve a distributed ledger managed by a lot of people who don’t necessarily know or care about each other,” Shiller told the News in an interview. “It is fun to read about their ingenuity in designing this system.
But the long-term integrity of the system does not seem assured to me, since it can survive only if people believe it has value, and there is no compelling reason to think they will.” Bitcoin was invented in 2009 by an anonymous person or group using the pseudonym “Satoshi Nakamoto.” As the world’s first digital, decentralized currency, bitcoin is not controlled by any institution or government. Transactions with paper money are often monitored by banks: If person A sends person B three dollars, the money usually flows through a bank before reaching person B. Bitcoin scraps the need for financial middlemen, as transactions are monitored and validated by computers around the world through the use of a blockchain.
The bitcoin blockchain is a public ledger of bitcoin ownership and ensures that each bitcoin has only one owner. At Davos, Shiller noted that the public euphoria surrounding blockchain — partly connected to the speculative bubble in bitcoin prices — is particularly high. Read more from yaledailynews.com…
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