Economist Warns of “Bitcoin Aristocracy” Ruling the World

Key Takeaways

  • Dr. Danielsson stated that support of Bitcoin is based in “mysticism,” comparing Bitcoin to stamps or beanie babies.
  • He claimed that Bitcoin must be used for commercial transactions to be successful.
  • The article warned of wealth disparity created by high Bitcoin price points, ignoring the huge disparity of the world we already live in.

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Dr. Jon Danielsson, the Director of the Systemic Risk Centre at the London School of Economics, has written one of the most bearish takes on Bitcoin to date — but his argument may have missed a few key points.

BTC Is Not a Safe Haven

Danielsson wrote that “most of us would not want to live in a society where bitcoin [sic] succeeds.”

He stated that without providing a valuable service, investing in crypto is like “collecting stamps or beanie babies,” adding:

“The bitcoin [sic] enthusiasts are quite vague on what success means beyond rising prices, they seem more fond of arguments wrapped in mysticism than basic economic logic.”

Danielsson wrote that Bitcoin must be used in commercial transactions to be successful, saying all other use cases depend on it. He went as far as describing BTC’s success as a zero-sum game. It either replaces current transaction mediums like the Euro, Pound, Yen, and so on, or it utterly fails.

Use cases beyond this, such as a safe haven asset, are superfluous, according to Danielsson.

In his argument, he also cited Dr. Mohammed Cheema, a Senior Lecturer in Finance at the University of Waikato. In Cheema’s article, he pointed to research that crypto is viewed as risky, citing himself as his own source, before adding that BTC is not a safe haven — and he’s right.

There is little hard evidence that Bitcoin is currently a safe haven asset. Indeed quite the opposite.

During the March 2020 crash, BTC fell as hard as the rest of the global markets. Moreover, analysts within and without the crypto industry have reminded that a small allocation can improve a…

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