James “Jim” Chanos believes that Bitcoin is nothing more than a “security speculation game masquerading as a technological breakthrough in monetary policy.” The Yale-educated economist shared his thoughts on financial fraud and why it’s on the rise, cryptocurrencies, and other matters with the Institute for New Economic Thinking, a New York-based think tank. Chanos believes that as bull markets in the crypto industry keep advancing, there will be a rise in the number of questionable blockchain and crypto companies.
Food Would Be Better Than Bitcoin In Worst-Case Scenario
Chanos is most famous for having predicted the fall of American energy giant Enron Corporation before it filed for bankruptcy in 2001. When asked to share his thoughts on cryptos, Chanos minced no words as he tore into cryptos, terming them a libertarian fantasy. While he has no doubt that the fiat currencies which Bitcoin seeks to replace could one day bring the world to its knees, Bitcoin is still the last thing he’d want to own if the grid went down.
And what is Bitcoin good for?
Bitcoin is still the area for people who are trying to avoid taxation or other examinations of their transactions. That’s one thing where I think it probably still has utility, but the governments have figured that out.
Crypto enthusiasts hail the blockchain and cryptos as revolutionary, yet these proponents still turn to old technology, Chanos claims. Giving an example of an early crypto enthusiast who made money from crypto trading in 2017 but was still using a fax machine to cash in on his earnings, Chanos reiterated his belief that cryptos were nothing but a security speculation which is touted as a technological breakthrough that will transform the current monetary system.
Someone at Grant’s interest rate conference recently said that it was as if we had intentionally created a “monetary Somalia.”
The crypto craze of the past year fits the classic fraud cycle, the man who also teaches a course on financial fraud at Yale University stated. In the cycle, people’s caution and skepticism gradually fade away as the financial markets improve, and they begin to invest in projects they ordinarily wouldn’t have. This makes it easier for fraudsters to carry out their activities. Once the financial cycle dies down, those fraudsters become easy to spot.
Chanos also believes that cryptos would work the least in a worst-case scenario, contrary to many people’s belief. Many crypto enthusiasts believe that a fiat apocalypse is on its way and that cryptos will save the day, but they would not – especially not as a store of value.
Food would work the best!
Chanos echoed the sentiments of fellow economist and renowned crypto skeptic Nouriel Roubini. Roubini has vocally expressed his skepticism on as many platforms as have been available to him. A favorite at many financial industry discussion panels, he has referred to cryptos as the biggest bubble in human history and a “colossal pump and dump scheme.” Roubini has also called out crypto projects, especially Bitcoin and Ethereum, for claiming that they are decentralized while the mining of these digital assets is controlled by big companies that can afford expensive mining equipment.
from NullTX