One has to admire the ego that economist Nouriel Roubini is carrying around. In a recent missive the famed economist decided to unleash another torrent of hate against cryptos, blockchain and anyone who doesn’t have a seemingly pathological disgust for what he calls, “nothing more than an Excel spreadsheet or a database with a misleading name.”
Nouriel Roubini didn’t feel like stopping at weighing in on a technology, and chose to make sweeping statements that are as absurd as they are inaccurate. This passage from his article is absolutely choice,
“In practice, blockchain is nothing more than a glorified spreadsheet. But it has also become the byword for a libertarian ideology that treats all governments, central banks, traditional financial institutions, and real-world currencies as evil concentrations of power that must be destroyed.”
The idea that blockchain is a “byword” for libertarian ideology is wildly absurd. Blockchain-based platforms are being patented by most major banks, and international powerhouse IBM is actively working to implement blockchain platforms with partners like Walmart. It would be hard to find a global corporation that was less libertarian than Walmart, or the global money-center banks.
Nouriel Roubini isn’t Getting It
Let’s get this out of the way, cryptos were never, “the mother of all bubbles.” At their peak the entire sector was worth under a trillion USD, which isn’t even as large as Apple, based on their market cap at the time of writing. Bitcoin is a revolutionary way to use the internet, and no one can ever take that away.
Will Bitcoin be the next global financial system?
In all likelihood, Bitcoin was never designed to replace the world’s banking system. It has spurred massive development across numerous innovation hubs, like Singapore, Hong Kong, Canada, and Thailand, which is impressive for a technology that came into existence around a decade ago.
The World Bank is also issuing bonds on a blockchain platform, but Mr. Roubini doesn’t seem to be too concerned with reality at this point.
When is a Blockchain Not a Blockchain?
There is no denying the fact that there is a lot of money being spent on developing blockchain platforms that have nothing to do with cryptocurrency. Faced with this, Nouriel Roubini seems to be pulling a page from Orwell’s 1984, and redefining words so they fit into his worldview.
Never mind the fact his definition of blockchain requires you dive into the cognitive dissonance pool head first, and read on, “Moreover, in cases where distributed-ledger technologies – so-called enterprise DLT – are actually being used, they have nothing to do with blockchain. They are private, centralized, and recorded on just a few controlled ledgers. They require permission for access, which is granted to qualified individuals. And, perhaps most important, they are based on trusted authorities that have established their credibility over time. All of which is to say, these are “blockchains” in name only.”
If you can swallow that line of thought, North Korea might have work for you in their Ministry of Truth, or whatever they call their propaganda creation department.
Mr. Roubini also applied the GINI coefficient to the Bitcoin economy, as though it was a real country. The damnation of Bitcoin went further and included allegations of white male billionaires acting as messiahs, as well as crypto market transaction price fixing by nations like China and Russia.
Mr. Roubini Doth Protest Too Much, Methinks
Last year was all about hating cryptos and blockchain. JP Morgan CEO Jamie Dimon did it, and China was right there with him. Today JP Morgan is patenting blockchain technology, and China is doing a lot to support blockchain development. Hong Kong has decided that blockchain developers are worth creating emigration exemptions for, and the blockchain start-up funding market in Singapore is white hot.
By today’s standards, cryptos were never that big of a bubble (clearly last December’s crypto prices were bubbly, viewed on a relative basis). Now all the cryptos combined might be worth a quarter trillion dollars, which is about half of what Facebook is selling for at the moment. So, you know, not a big market.
More than a decade ago when Nouriel Roubini was railing against synthetic bonds, he was talking about a massive market that was fragile enough to make the global financial system grind to a halt. He went against the grain, was correct, and gained a lot of credibility as a result. Now he is building another intellectual position, but he is taking much bigger risks on a much smaller market which is clearly thriving.
One wonders why.