At a UBS panel this week, Nobel prize laureates in economics spoke out about bitcoin, adding to the list of winners of the prestigious prize who have taken a negative view of the controversial cryptocurrency.
When asked about their views on bitcoin, laureates James Heckman (2000), Thomas Sargent (2011), Angus Deaton (2015), and Oliver Hart (2016) laughed nervously and looked at each other as if the question was unappetizing, before Hart stepped up, musing “I’ll make it very easy for the others.”
The British-American, who won for his contributions to contract theory, said he was “trying to understand it,” but that “it’s a struggle.”
“I’m skeptical about bitcoin, probably like the others,” he said. “I think [2011 Nobel laureate for economics] Chris[topher] Sims gave a talk and I think he said it should have a zero price, which is basically what I think.”
“Tulips,” interjected Heckman, referring to the speculation that drove tulip mania in 17th century Netherlands.
Other Nobel laureates have taken a similarly dim view of bitcoin and cryptocurrency. Last year Joseph Stiglitz (2001) said it should be outlawed and Robert Shiller (2013) said “it’s such a wonderful story. If only it were true.”
Blockchain and smart contracts, Hart added, echoing many in the banking industry, has potential as a useful technology. (Blockchain is the underlying decentralized ledger technology on which bitcoin is built, and is used by some financial institutions and other companies to make transactions faster and cheaper.) These tools could prove to offer “small positive effects such as automating things…which strikes me as saving a small transaction cost,” he said.
“Does the world really need another speculative asset,” said Deaton. A reporter asked whether it could be a better form of money, to which Deaton mused, “it’s better if you’re a criminal, I don’t know why else.”
“The only advantage as far as I can see is you can be a crook,” he said. “You don’t want to leave any record. It’s not an accident that people who demand ransoms demand them in bitcoin. I’m not sure anyone else does. Maybe New York City schools?”
Deaton, Yahoo Finance confirmed, was citing this school, about which Yahoo Finance reported in December.