A prominent United States-based economist has described cryptocurrency as a “bubble” and does not believe it will succeed.
“Many financial services and firms thereof, really have no idea what is going to emerge in cryptocurrency because there are so many competing firms, so many competing standards. It is not clear that any are going to succeed.
“Something associated with blockchain is going to succeed, but cryptocurrency at this point strikes me as a bubble and it’s a bubble and is therefore very popular to discuss,” said Professor Andrew K. Rose, of the Haas School of Business, University of California, Berkeley.
Rose, a professor in Economic Analysis and Policy, was being interviewed Tuesday night by veteran regional journalist, Julian Rogers on the topic “Looking Forward: How Caribbean Nations Can Respond to Global Developments.”
The event was the Central Bank of Barbados’ 5th Caribbean Economic Forum, and Rose, said cryptocurrency “is far from being a currency.
“You can’t use it to buy coffee at the local Chefette (fast food restaurant) and I don’t see that changing anytime in the foreseeable future”.
Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger. Bitcoin, created in 2009, was the first decentralized cryptocurrency. Since then, numerous other cryptocurrencies have been created.
Rose told his audience that “digital currency in some form will emerge sooner or later”.
In his deliberation, the economist said that Caribbean countries like Barbados should look at how Iceland has been able to develop its economy.
“It is a ….relatively small country, very much involved in tourism, so it is similar in size and scope to Barbados in a number of ways and therefore to other Caribbean countries.
“Iceland went through the ringer, they did not go to the IMF (International Monetary Fund), they knew what they had to do. They got help from the European Union, but they have completely restructured their economy.
“So If I had to look for an example…avoid going to the IMF and not do things in the traditional ways, (I would say) think of Iceland,” he told the audience.
He also said that the current Brexit negotiations, where Britain is holding talks with the European Union to leave that grouping, will create economic turmoil for the region.
“I can’t imagine you will see any serious negotiations concluded for Brexit over the foreseeable future and that is going to lead to tremendous uncertainty for anything related to British commerce.”
He said Barbados would be seriously affected because “lots of tourists” come from United Kingdom and therefore would affect other businesses.
“That’s not going to be good news for the countries of the Caribbean that want to do business with the UK,” he said, noting that “while in some sense you want the Brexit negotiations to be tough …but that said, anything that adversely affects the UK is going to be bad for anyone doing business with it”.
“If I were in charge, and I have no desire to be in charge, I would say diversification from the UK is a good idea. North America seems to be the most obvious choice for the countries in the Caribbean,” he told his audience.