Bitcoin : the economists shout out to the bubble, in vain

the bitcoin, a virtual currency that is described as a ‘speculative bubble’ likely to”implode’ (Photo KAREN BLEIER. AFP)

Too “volatile” without “foundation”, and “dangerous”: many economists are mounted to the niche in recent days against the outbreak of the bitcoin, described as a “speculative bubble” that could”implode”. Without stopping – for now – the phenomenon.

How far will the upsurge of the bitcoin, a virtual currency whose value has been multiplied by 10 in less than a year, and should we worry? For some Nobel prize in economics, the answer is all views: this crypto-currency is going to “collapse”, and its followers are going to bite the fingers.

“It is a bubble that is going to give a lot of people a lot of very exciting moments as she comes up, and then that will go down”, warned Wednesday Joseph Stiglitz, 2001 Nobel prize winner, on the board of Bloomberg TV.

The bitcoin “serves no function socially useful” and does “because of its potential to bypass the deficit” supervision: “it seems to me that the bitcoin should be banned”, said the american economist.

In a column published Thursday in the Financial Times, the French Jean Tirole, laureate of 2014 and president of the School of economics, Toulouse, france, was also pointed at the risks of this virtual currency.

“Bitcoin raises two separate issues. Is it a viable currency in the long term? And if it is, does it contribute to the common good? My answers are: probably not… and definitely not”, explains the researcher.

– The “evil” –

Other economists have warned against the dangers and abuses associated with virtual currencies, to the image of the 2008 Nobel laureate Paul Krugman, who had compared from 2013, the bitcoin “evil”, or Robert Shiller, a specialist in financial bubbles.

“The enthusiasm for bitcoin is disproportionate to its immediate implementation,” said this professor at Yale university, he also holds a Nobel (2013). “This is the perfect example of a speculative bubble”, he added.

Jean Tirole, the bitcoin is “an asset with no intrinsic value”. It “is akin to a dream libertarian but it is a real migraine for anyone who perceives the public policy as a complement to the market economy”, argues the researcher.

A message relayed by several central bankers: the governor of the Bank of France, François Villeroy de Galhau has been estimated on Friday that those who invested in bitcoin were “entirely at their own risk”.

Randall Quarles, one of the governors of the american central Bank, has estimated on Thursday that if the “digital currencies do not pose a major threat to their current levels, the broader issues of financial stability that could arise if their use becomes widespread.”

Fun – outlandish –

Not what is cool, however, the enthusiasm of investors. On Friday, the price of bitcoin remained very high, in the vicinity of 10,500 euros. And the prospects in the short and medium term remain encouraging, in view of the positions of the players in the market.

A regulatory authority in the us has given on Friday a green light unique to the investment instruments developed by both Exchanges, and a broker to speculate on the evolution of bitcoin. The first will be available from 18 December.

A sign that the Nobel prizes are preaching in the desert? “Their warnings do not affect the followers of bitcoin, because they are seen as members of the old world, people who belong to the system,” judge Christopher Dembik, economist at Saxo Bank.

Defiance visible on Twitter, where some ironisaient Friday on the positions of the governors of central banks or of the Nobel prize. “If Stiglitz and Krugman hate both the bitcoin, then I buy”, wrote one internet user.

For Christopher Dembik, “there is without doubt a pleasure transgressive” in the use of bitcoin. A pleasure that holds on to the DNA of this virtual currency, perceived as sultry and as “anti-system”.

“The problem is that, beyond the informed investors, and who will withdraw at the right time if the bubble bursts, it is simple quidams, who are not familiar with the functioning of this currency. They are the ones who will be the turkeys of the farce”, warns the economist.

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