Bitcoin, the world’s most valuable digital asset, may not last that much longer. Senior Professor at Cornell University, Eswar Prasad, recently warned about this crypto-currency and its risks associated with it such as volatility in value or hacking attacks on cryptocurrency exchanges.
These, he says, can lead to losses for investors who have bought bitcoins at higher prices before news of these events became public knowledge resulting in price drops across all currencies backed by bitcoin. Eswar Prasad is a senior professor of international trade policy at Cornell University.
The economist recently sat down for an interview on CNBC’s Squawk Box Europe and discussed his thoughts regarding the recent surge in cryptocurrency assets. He believes that this increase has pushed central banks into developing digital versions of their own currencies because they’re trying to stay one step ahead of crypto-based competitors who may soon create new financial services around these technologies as well.
Prasad is a cautious investor, but he’s open-minded about new technologies, especially blockchain technology. Prasad is considered to be one of the most influential economic theorists in his field. He received his Ph.D from University of Chicago in 1992 and has been teaching at Harvard since 1996 thereafter publishing many books on topics related to microeconomics, macroeconomics, international trade etcetera.
In his recent interview with CNBC, Prasad said, “Given that bitcoin is not serving well as a medium of exchange, I don’t think it’s going to have any fundamental value other than whatever investor’s faith leads it to have. Bitcoin’s use of the blockchain technology is not very efficient.”
Bitcoin in 2021
The cryptocurrency market experienced an incredible increase in value this year. One of the most popular coins, Bitcoin started off at just over $29k and is now valued around 80% higher than it was when you bought them.
On a different turn of events, the price of Bitcoin has been struggling to stay above $50,000 for the last several days. This is not surprising given that there are a large amount now facing losses as their investment was based on an exchange rate higher than what they invested at or will ever see again.
Glassnode mentioned, “As the recent correction from the ATH progressed lower, it put an increasingly large proportion of supply into an unrealized loss. Coins have been spent and redistributed through this time, which reshuffles the UTXO realized price distribution (URPD). At the time of writing, approximately 3.7M BTC, representing 19.5% of the supply is underwater. On a more constructive note, a reasonably large volume cluster has been established in this week’s price range, equivalent to 2.214M BTC (11.7% of supply).”