Exclusive interview: why Nouriel Roubini is so "hates" cryptocurrency?

Nouriel Roubini, an economist at new York, which is famous for its accurate prediction of the financial crisis of 2008. A Harvard graduate and now a Professor at the school of business Leonard N. Stern always skeptical of industry of cryptocurrency.

A Week ago, Roubini spoke at another hearing of the U.S. Congress devoted to the crypt. During his report, the economist warned senators about «mother and father of all bubbles and scams». Recently, the expert explained in detail to his point of view in an exclusive interview.

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vs Why cryptocurrency?

I'm not against them, I'm open to any innovation. However, I have experience in the financial crises and bubbles. I became known for predicting the global financial crisis.

If the blister on the market is really there, I can see it. For me, this whole industry is the mother and father of all financial bubbles that ever existed.

Last year almost everyone I knew asked me: «Should I buy a Bitcoin?» At this time, the price of cryptocurrency has doubled, tripled and grew even up to $ 20,000. Then the bubble burst, Bitcoin at the same rate slipped back to six thousand.

If you bought high, you have already lost 70 percent of their investment. It is typical for all the bubbles: they grow too fast until the very end. Bitcoin is a classic example of such a situation. The rest of the cryptocurrency has lost more than 90 percent.

image Source — Twitter

I'm in the last year said that the stock market will fall. And you know what? I was right.

Bitcoin can fly to the moon or drop to zero. I'm not going to put either the one or the other.

I'm just a scientist who expresses their thoughts. If the market is a bubble, it's fair to discuss the problem and its causes.

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What about Ethereum?

In one study stated that 81% of all ICO was a Scam from the beginning. 11 per cent died or were unable to reach exchange. Only a remnant of that number could go up for auction, then to lose more than 95 percent of its value.

I used to have bubble and all of its beneficial used — bought crypts produce new tokens on ICO. Now these «guru» disappeared.

99% of cryptocurrencies are absolute zero. Only due to the fact that some people believe in alternative to Fiat (alternative to gold), some people will buy Bitcoin. Bitcoin will not disappear. But Ethereum is more like a Scam, it's worthless. In the same way, Ripple and hundreds of other coins.

Why do you think that Ethereum is a Scam?

This is a Scam because of the technology. They [ Foundation] talk about smartcontract, but there is nothing «smart». Most of them have bugs, in addition, the contracts may be backed only by the code.

They tried and they failed: DAO is a vivid example.

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You Know, a lot of developers talking about their decentralized applications. And what are 75% of these apps? CryptoKitties, pyramid, casino and other fraudulent schemes. After so many years of existence that we can give the Ethereum? Lions on the blockchain and «» for fraud? And that's all? Nobody will use these things in the future.

But if smartcontract are technology, as you put «zabagovannoy» we can fix this. Don't you think we need more time for innovation in this sphere?

First, I don't believe in themselves smartcontract. By definition, the execution of each contract shall be carried out by lawyers and law. So the idea is to replace them with lines of code just seems ridiculous. In the worst case only one percent of a typical program can contain bugs. In smartcontract this number is equal to ten percent.

Besides, the question remains scalable cryptocurrency. Does not exist the system that could make them applicable on a global scale. Every day Bitcoin is becoming more centralized.

From the crypt none of the functions with which it is conceived must possess. It is not scalable, it is not decentralized, it's not safe. What's it all worth? With Bitcoin you can do 5 transactions per second, while Visa handles over 25 000 remittances over the same period.

They [cryptocommunist] always say that will solve all the problems with Proof-of-Stake. Still nobody has reached. And even if the result will be something scalable, it will be centralized, and thus not be so safe. The result — in technology has a fundamental flaw.

Yes, those financial system that we know of, centralized. But at least they work.

Even acne Buterin talked about the fact that it is impossible to create a system that would have three characteristics: scalability, decentralization, and security.

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What's wrong with the economy

Even after the 2008 crisis you still believe in the traditional financial system?

The Traditional financial system is centralised — there is nothing wrong if the process involved institutional bodies. Cryptomnesia criticizing the current order and stoked for decentralization. But I prefer a centralized system with a trusted authority.

How can we talk about decentralization: minersmore like oligopoly, the developers and the exchange is also fully centralized. All this is worse than North Korea.

image Source: Bloomberg

At the same time the traditional financial system also has many problems. I have always been one of the most skeptical critics of the traditional order in the economy. Its efficiency can be improved through innovation, but they have nothing to do with Baccano.

In the financial services has its own revolution . It has nothing to do with cryptocurrencies and bloccano.

FINTECH is based on artificial intelligence, machine learning, Internet of things and other modern concepts. Thanks FINTECH in the areas of payment systems, insurance and asset management has been a real revolution.

Take, for example, the payment system. Now there are many such structures that handle billions of transactions per day and are used by billions of people around the world. China has AliPay and WeChat Pay, work in Africa M-Pesa, in the US — Venmo, PayPal and Square. We don't need a crypt or a blockchain for significant changes in finances.

the Whole philosophy of industry is to create a transparent financial system and a new world order. You think, in fact, the crypt didn't work out?

Of Course, it is a complete failure. For 10 years, not a single revolutionary application, cryptocurrencies are constantly falling, while none of the major organizations do not use the blockchain.

Why should I trust someone from Russia and China to get my transaction was verified? It is not safe. There are Central banks, corporations and other bodies with a long track record.

so you better trust to the Bank? How can you be sure that your money is safe?

We Have laws. If the Bank is manipulating markets, it will be fined a huge amount and many people will go to jail. Yes, traditional financial system has problems, but the blockchain and crypt will not be able to solve them. But pentaho it.

I don't believe in the blockchain.

Community around cryptocurrency — just a bunch of arrogant people who spread rumors about «the democratization of Finance».

Your point is clear. But let's be clear that the banking system has existed for hundreds of years, right? Maybe we should give Bitcoin and the crypt of chance?

No. I wouldn't do that. It is better to rely on those innovations that will really change the financial system.

Financial technology increase competition in the banking sector, because banks simply will not survive in this market. Again, these technologies have nothing to do with Baccano. Why should I give the advantage to the fact that so never and has not proved its usefulness?

My last question. Have you ever tried to trade a crypt?

Have Not tried. Many people say: «Oh, he's so critical of the crypt, because shortit Bitcoin». I do not participate in the auction at all.

image Source — Reddit

I Have only my reputation as a scientist. If I'm wrong, it will hurt. But I don't want to bet. And besides, I'm not going to open long or short positions, because in that case I will have an incentive to talk about Bitcoin in a positive or negative light. I'm an intellectual and don't seek to make money.

An Exclusive interview with Nouriel Roubini took the journalists . Impressions are divided .