Cornell Professor Believes Bitcoin's Days Are Numbered, Lauds Altcoins for Better Use of Blockchain

The Indian-American economist is convinced that blockchain will end up being Bitcoin’s biggest legacy.

By Shomik Sen Bhattacharjee | Updated: 20 December 2021 18:47 IST

Cornell Professor Believes Bitcoin's Days Are Numbered, Lauds Altcoins for Better Use of Blockchain

Bitcoin’s price has been highly volatile over the last few weeks

Highlights

Prasad believes CBDCs could play a role in improving financial stability
Prasad claims newer cryptos use blockchain more efficiently
Bitcoin has been extremely volatile over the past few weeks

Bitcoin's value may be up 92 percent over the past year with a market capitalisation of over $1 trillion (roughly Rs. 75,87,463 crore) but there are still sceptics, including Eswar Prasad, an international trade policy professor at Cornell University and an author, believes that the largest cryptocurrency might not stick around for much longer. Prasad, in a recent interview, stated that Bitcoin might fade out of existence due to lack of efficiency and its inability to facilitate exchange as a mode of payment.

Prasad believes that Bitcoin has no fundamental value because it cannot function as a suitable medium of exchange. “Bitcoin's use of the blockchain technology is not very efficient. It uses a validation mechanism for transactions that is environmentally destructive that doesn't scale up very well,” he said in an interview with CNBC.

Prasad, added that the days of Bitcoin may be numbered, adding that blockchain will become Bitcoin's greatest legacy. The Indian-American economist opposed the consensus mechanism for Bitcoin's "environmental destruction" adding that these are the new green alternatives. "I think the promise of decentralised funding with blockchain is real, but Bitcoin itself may not last long," said Prasad.

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However, he conceded that Bitcoin had "started a revolution" in payments, citing the fact that central banks are now rushing to issue their own digital currencies, "In my view, the central bank currency will continue to prevail as a store of value."

Prasad further explained that central bank digital currencies (CBDCs) "could be good in many ways in terms of providing an additional payment option, a low-cost payment option that everybody has access to, increasing financial inclusion, and potentially also increasing financial stability."

"Much as you might not like Bitcoin, it has really set off a revolution that ultimately might benefit all of us either directly or indirectly."

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Prasad who's previously served as chief of the financial studies division in the International Monetary Fund's (IMF) research department and head of the IMF's China division also praised fiat-linked stable-coins for creating a more efficient way of changing money.

Bitcoin's value and popularity has soared since its inception 12 years ago, but trading has been extremely volatile lately. The biggest digital currency is currently valued at $48,792 (roughly Rs. 37.02 lakh), down 2.21 percent over the past 24 hours. The cryptocurrency has jumped 92 percent year to date but has slumped close to 22 percent in the last month.

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