The Nobel Prize-winning economist Robert Shiller described Bitcoin as an “interesting experiment” rather than the future of our financial system.
In a panel discussion on cryptocurrencies at Davos, he said: “Bitcoin is another really clever idea, I’m impressed with the technology, but it seems to me that it’s technology for something else…. I tend to think of Bitcoin as an interesting experiment, it’s not a permanent feature of our lives. We’re over-emphasising Bitcoin, we should broaden it out to blockchain, which will have other applications.”
There was also scepticism from Cecilia Skingsley, Deputy Governor at the Swedish Central Bank. In her opinion, Bitcoin doesn’t even count as a currency.
Cryptocurrencies “don’t meet criteria to be called money: they don’t store value, they fluctuate, and they’re not at a stable rate of exchange,” she said.
That didn’t mean that we’ll carry coins and notes about with is forever. There was broad agreement on the panel that the future of cash would look very different. Professor Shiller praised Chile’s use of the “Unidad de Fomento” or UF – a stable unit of exchange. “Every country should adopt what Chile has adopted,” he said.
“Cash is going out of fashion quickly in Sweden,” said Skingsley. She talked of the transition to the “e-krona” far in the future. “We don’t know if we’ll use Blockchain, but it will work as a one-to-one exchange rate to the krona, as a compliment to notes and coins.”
Bitcoin had its defenders, particularly in the investors on the panel.
“If you think about how seamless everything is with technology, and you think about our financial system, there is a mismatch. Who’s there to say things will not be totally different?” said Jennifer Zhu Scott, principal at Radian Partners. “The breakthrough could happen any time.”
Bitcoin was born just nine years ago, the first of a band of cryptocurrencies that are now worth over $100 billion.
“I think this is one of the most audacious, generous and profound inventions that I’ve witnessed in my career,” said Neil Rimer, General Partner and Co-Founder at Index Ventures SA.
“It could fail completely and go to zero, but it has accomplished a number of things I think are remarkable.”