Short seller Jim Chanos, who predicted the fall of Enron Corp., has developed a view of Bitcoin: It would fail in a crisis. Fiat currencies such as the dollar have advantages when things go awry, because governments can enforce their use and act as lenders of last resort, Chanos said in an interview with the Institute for New Economic Thinking published on Monday.
Digital coins, on the other hand, have no such backing. “For those who believe that you need to own digital currency as a store of value in the worst-case scenario, that’s exactly the case in which a digital currency will work the least,” he said.
“The last thing I’d want to own is Bitcoin if the grid goes down.” Food would be better, he said. The past year’s euphoria over Bitcoin and other cryptocurrencies fits into the “fraud cycle,” in which people grow less skeptical during long periods of market gains, plowing into investments that would normally seem too good to be true, he said.
The bull market of the 1990s culminated with accounting scandals such as Enron’s. Later, another run led to the global financial crisis of 2008, he said.
“We’re now nine years into this bull market, same as the ’90s, so I suspect that now things are starting to percolate,” he said, singling out Bitcoin and initial coin offerings for other tokens. “This is simply a security speculation game masquerading as a technological breakthrough in monetary policy.” Read more from bloomberg.com…
thumbnail courtesy of bloomberg.com