HomeAltcoinsNouriel Roubini, Bitcoin maximalist?

Nouriel Roubini, Bitcoin maximalist?

Nouriel Roubini

Nouriel Roubini’s fascination with Bitcoin dates back to April 2013, when he made a brief remark about a sudden 40 percent price decrease of BTC. What started as a simple remark has grown into a true technological obsession, as the American economist has kept commenting on the market movement of cryptocurrencies. For the most part, his comments often remained within the mainstream boundaries of price speculation (Mr. Roubini is known for his prediction that “Bitcoin will get close to zero“) and reiteration of the “Bitcoin isn’t a currency, but a Ponzi” narrative.

However, as noted by Giacomo Zucco, Nouriel Roubini’s latest comments are very similar to the arguments Bitcoin maximalists always present: altcoins are scams, private blockchains are a bad and inefficient idea, and Ethereum is overly centralized in its governance.

Nouriel Roubini, critic of private blockchains

The fact that Mr. Roubini, also known among economists as Prof. Doom, is critical of ICOs should be old news by now: he spent a lot of time in 2018 going to conferences that bankers and finance people attend, just to be critical of anything related to blockchains. During the Milken Institute debate, he called the blockchain a “glorified excel spreadsheet“, and he proposed other FinTech innovations as alternatives for a true revolution of the ways in which we use money (AI, machine learning, and the use of big data).

But on October 8th, 2018, the economist also took a shot at the blockchain collaboration between IBM and Carrefour. In a nutshell, his argument was that the technology is largely misused and serves as a “centralized database”. Why have a blockchain if you aren’t going to take advantage of permissionless and trustless nature? Well, that’s an issue which Bitcoin maximalists often argue on, and this comment has successfully bridged the ideological gap between Mr. Roubini and those who consider BTC to be the gold standard of digital currencies.

Nouriel Roubini, critic of altcoins

A true Bitcoin maximalist knows that altcoins are, for the most part, greedy cash-grabs which don’t really bring something new to the market and rely on pump and dump schemes. Due to Bitcoin’s slow approach towards solving its underlying scalability issues and its transition to a store of value approach, we’ve witnessed the rise of many other coins which claim to offer faster and cheaper transactions. However, most of them lack the infrastructure to resist 51 percent attacks, have a shady and arbitrary approach to governance which points out to an unpredictable type of centralization, and mostly exist in order to enrich the creators.

Mr. Roubini couldn’t stay away from such a lucid commentary on the state of altcoins, and went on to say that shitcoins don’t even deserve their association with manure: while the former is vaporware, the latter enriches the soil and helps agriculture. Once again, it’s the kind of commentary that somebody like Dan Dark Pill or John Carvalho would make on a casual Monday night without thinking too much of the validity of the arguments. Due to centralized governance, more than 90 percent of altcoins are scams.

Nouriel Roubini, enemy of the Ethereum kingdom and its ruthless dictator Vitalik Buterin

While debating with crypto enthusiasts Alex Mashinsky and Bill Harhydt at a Milken Institute event, Mr. Roubini had briefly described a meeting with a young man who “nonchalantly” claimed to own a majority of the mining rigs and hashing power of both Bitcoin and Ethereum (he was probably referring to Jihan Wu). Given this insight of his, the economist has constantly claimed that “decentralization is bullshit” and all the concentration of power proves that there is too much hype going on in the blockchain industry.

But on October 8th 2018, the same prolific day which featured all the tweets presented in this article, Mr. Roubini has taken his criticism a step further by calling Vitalik Buterin a “dictator for life”. It’s interesting that the ongoing industry-specific narrative has been that of a “benevolent dictator”, a person who works for the project and makes use of power in a way which benefits the project at large. The concept is utopian and can lead to many critical cases during risk analyses, and the most sound insights on the matter belong to Bitgold and social contracts pioneer Nick Szabo: “trusted third parties are security holes“.

Once again, Prof. Doom found himself harmonizing with the voices of Bitcoin maximalists, who had been taking shots at Vitalik Buterin ever since he left Bitcoin Magazine to raise funds for Ethereum (and the criticism has intensified after the DAO hard fork).

Is Nouriel Roubini transforming into a Bitcoin maximalist?

After reading and interpreting these claims, it’s fun to speculate on the beliefs of Mr. Roubini: while he has been at the avant-garde of a crusade against Bitcoin for over five years, he also finds himself acknowledging that the blockchain space has plenty of flawed projects which truly make BTC look like the utopian money system it seeks to become. Saying that Ethereum and all the shitcoins are terrible applications of the blockchain technology doesn’t automatically elevate Bitcoin to a holy grail status, doesn’t deny its struggles to retain its anarchistic ethos in a greedy corporate world, and definitely doesn’t turn Nouriel Roubini into a believer (or maximalist).

However, the cryptocurrency industry should take notice that the same person who once called Bitcoin a Ponzi scheme has now gained more knowledge on the phenomena and is able to discern between the various blockchain projects. At most, it’s safe to say that Mr. Roubini is a Bitcoin agnostic: he’s well aware of the concentrated distribution, is able to criticize the mining centralization and the manipulative maneuvers of centralized exchanges, but simultaneously can’t object against the protocol itself. In many ways, this is a step towards beginning to believe in Bitcoin, and we might be witnessing a historic shift during which a world-renown economist publicly acknowledges the virtues of digital sound money.

It seems like we have reached a point where Nouriel Roubini’s comments are much more than speculation and FUD, and maybe that the community should do its best to eliminate the highlighted issues. Even Bitcoin maximalists can agree on the corruption surrounding exchanges, and often question the sustainability of the current mining concentration. And we should all be aware that whatever famous economists say will turn into mainstream media news articles which shape the opinions of the masses.

 

Nouriel Roubini, Giacomo Zucco, John Carvalho, and Dan Dark Pill have all been contacted in order to comment on the article. At press time, none of them have replied to the e-mails.

 

Later edit: However, Nouriel Roubini has decided to comment directly on Twitter through the following statement

I am not a Bitcoin maximalist. I am as skeptical and critical of a failing Bitcoin as I am skeptical of 1000s of shitcoins. They are all part of the same crappy garbage that is “on the brink of an implosion” as a recent study shows.

Featured image from Wikimedia

Written by

Vlad is a political science graduate who got a little tired and disillusioned with the old highly-hierarchical and centralized world and decided to give this anarchistic blockchain invention a little try. He found out about Bitcoin in 2014, had to do a presentation about it at Sciences Po Paris in 2015, but was too foolish to buy any. Now that he’ll never be a crypto millionaire and hasn’t acquired his golden ticket to lifelong financial independence, he’ll just write op-eds on various topics.

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