Skepticism around Bitcoin isn’t new. Yet, when Eugene Fama, a Nobel laureate and renowned as the “father of modern finance,” expressed his belief that Bitcoin would eventually crash to zero, it grabbed a lot of attention.
Fama argues that Bitcoin holds no intrinsic value, struggles with transaction efficiency, and doesn’t integrate seamlessly with traditional banking systems. But how sound are his arguments?
Bitcoin’s Drawbacks: A Critical Deficiency or a Misunderstood Progression?
Fama’s primary issue is the volatility associated with Bitcoin. For any currency to be effective, stability is key. Bitcoin’s wild fluctuations in value make it challenging for businesses to rely on it for payments. He contends that this volatility undermines its usefulness as a medium of exchange.
Additionally, Fama highlights the absence of backing from a central authority. Unlike fiat money, which is underpinned by governmental support, Bitcoin’s worth springs from pure market speculation and demand. Should this demand cease, its value could plummet to nothing. But does this give us the entire picture?
Nobel Laureate Eugene Fama Predicts Bitcoin Will Become Worthless via @ProMarket_org
— The Activist Investor (@activistinvestr)
The Value Proposition Debate: Is Bitcoin the New Digital Gold?
Opponents of Fama’s perspective note that Bitcoin is not solely aiming to be a currency; it’s morphing into a unique asset type. Many believe it to be "digital gold," a value store resistant to inflation and state influence. Unlike conventional currencies, Bitcoin’s supply is capped at 21 million coins, giving it an aura of scarcity that could go against inflationary tendencies.
NEW: “NOBEL LAUREATE” EUGENE FAMA PREDICTS BITCOIN WILL “GO TO $0 IN 10 YEARS”
What an idiot 🤡
— The Bitcoin Historian (@peterizzo)
Seen this way, Bitcoin’s volatility might actually be advantageous. While gold isn’t used in everyday purchases, its limited availability and historical significance grant it great value. If Bitcoin follows this similar path, it might not become a standard payment method, but being invaluable isn’t a guarantee.
What Could Drive Bitcoin to Worthlessness?
For Bitcoin to genuinely collapse, a few drastic circumstances would need to be realized. A global prohibition might decimate demand, complicating holding or trading for investors. A severe technological defect—such as a major bug in Bitcoin’s code—could destroy its reliability. Or an incredibly superior digital currency might supplant it.
Yet, Bitcoin has a record of resilience. Its history shows it has weathered numerous downturns, regulatory interventions, and critiques from financial elites, emerging robust each time. Could Fama’s outlook prevail in the end? Possibly, but wagering against Bitcoin has historically been an unwise gamble.
The Bottom Line: Divergent Paths Lie Ahead
Bitcoin’s trajectory remains unpredictable, stirring equally strong opinions. While some assert its downfall is inevitable, others champion it as a groundbreaking financial tool. The truth? Bitcoin is still in flux, and its destiny is tethered to adoption, regulatory landscapes, and market trends.
Featured image from City AM, chart from TradingView
