Cornell Economist Says Bitcoin Has 3 Flaws That Make People Seek Better Alternatives
Cornell University economics professor and former IMF China division chief Eswar Prasad sees three major flaws in bitcoin. Because of these flaws, the professor says that “bitcoin has really sparked a sort of search for a better alternative.”
Cornell University Economics Professor Describes Bitcoin’s Flaws
Cornell economics professor Eswar Prasad spoke about bitcoin’s flaws 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. He was previously the head of the financial studies division in the research department of the International Monetary Fund (IMF) and, before that, was the head of the China division of the IMF.
The first flaw concerns the energy consumption in bitcoin mining, which, according to Prasad, is “certainly not good for the environment”. The professor pointed out that on the other hand, Ethereum offers a method “It’s going to be a lot less energy intensive, and it could offer a lot of benefits that bitcoin was supposed to offer.” He added:
It could also make transactions much cheaper and faster.
The second point made by the professor was that bitcoin is not that anonymous after all. He cited the Colonial Pipeline case where law enforcement claimed to have recovered $ 2.3 million in bitcoins. He noted that other cryptocurrencies may offer more anonymity than BTC, such as monero and zcash.
The third flaw, according to the professor, is that bitcoin does not work well as a currency. He described BTC transactions as “slow and heavy” for use in payments, adding that its market is very volatile and the cryptocurrency has become a speculative asset. Prasad concluded:
So bitcoin has really triggered a sort of search for a better alternative and people seem to be looking for a medium of exchange that doesn’t require them to go through a trusted institution like the government or a commercial bank. – but it’s not quite there yet.
Do you agree with the teacher? Let us know in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
Warning: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, nor a recommendation or endorsement of any product, service or business. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, good or service mentioned in this article.