Last week I wrote about how bitcoin had shot up over $10,000. As of December 1, its value was even higher: halfway to the $11,000 mark.
What’s going on with the cryptocurrency? Some critics, including a Nobel laureate, think it’s a bubble, and it may be primed to burst.
Speaking to Bloomberg TV, author and economics professor Joseph Stiglitz, who won the Nobel prize in Economic Sciences in 2001, said he thought bitcoin out to be outlawed. “Bitcoin is successful only because of its potential for circumvention, lack of oversight,” he said.
“It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,” Stiglitz added.
In fact, it’s already giving people a run for their money. It rose above $11,000 just hours after hitting the $10,000 milestone, but then it sank 20 percent to just above $9,000. The cryptocurrency is trading at about $10,545 as I write this.
Goldman Sachs CEO Lloyd Blankfein seems to agree with Stiglitz’s assessment. He told Bloomberg that he didn’t feel that his bank needs a bitcoin strategy just yet.
“Something that moves up and down 20 percent in a day doesn’t feel like a currency, doesn’t feel like a store of value,” he said. “If it works out—and it gets more established, and it trades more like a store of value, and it doesn’t move up and down 20 percent, and there is liquidity to it—we’ll get to it.”
Bitcoin serves as “a vehicle for perpetrating fraud,” Blankfein added.
Billionaire investor Carl Icahn told CNBC that bitcoin “seems like a bubble.”
“It’s sort of amazing to me,” Icahn said. “If you read history books about all these bubbles, like in Mississippi—where John Law went around selling all this land in Mississippi that was sort of worthless and the French were going crazy giving him all this money. And then one night it all blew up…to me, that’s what [bitcoin] is.”
But not every investor—or trading exchange—agrees. CME Group, which owns the Chicago Mercantile Exchange, said it would list bitcoin futures in mid-December; and Nasdaq plans to do the same next year.
And, of course, Silicon Valley is one major center of bitcoin supporters. Tech giants Peter Thiel, who started PayPal and now runs an investment firm of his own; and venture capitalist Marc Andreessen, are both big supporters of bitcoin.
What do you think? Is bitcoin in a bubble? Does it deserve a legitimate place in mercantile exchanges and currency listings? What is bitcoin’s future? Share your thoughts in the comments.