Cornell University economics professor and former head of the IMF’s China division, Eswar Prasad, sees three big flaws in Bitcoin. Because of these shortcomings, the professor says that “Bitcoin has really sparked a search for a better alternative”.
Cornell University economics professor outlines Bitcoin’s shortcomings
Cornell economics professor Eswar Prasad spoke about Bitcoin’s shortcomings in an interview with CNBC on Thursday.
Prasad is Nandlal P. Tolani Senior Professor of Trade Policy and Professor of Economics at the Charles H. Dyson School of Applied Economics and Management at Cornell University. He is also a Senior Fellow at the Brookings Institution. Previously, he was Head of Financial Studies in the Research Department of the International Monetary Fund (IMF) and prior to that, Head of the China Department of the IMF.
The first mistake concerns energy consumption in Bitcoin mining, which, according to Prasad, “is certainly not good for the environment”. The professor pointed out that Ethereum, in contrast, is developing a method “that will be much less energy-intensive and that could offer many of the benefits that Bitcoin should offer”. He added:
It could also make transactions a lot cheaper and faster.
The second point the professor made was that Bitcoin isn’t that anonymous after all. He cited the Colonial Pipeline case, where law enforcement officials alleged they had seized $ 2.3 million worth of Bitcoin. He noted that other cryptocurrencies may offer more anonymity than BTC, such as Monero and Zcash.
The third mistake, according to the professor, is that Bitcoin doesn’t work well as a currency. Describing BTC transactions as “slow and cumbersome” for payments, he added that the market is very volatile and cryptocurrency has become a speculative asset. Prasad concluded:
So Bitcoin has really sparked a search for a better alternative and people seem to be looking for a medium of exchange that doesn’t have to go through a trustworthy institution like the government or a commercial bank – but it’s not quite there yet.
Do you agree with the professor? Let us know in the comments section below.
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