One professor of economics at the New York University Stern School of Business, and a well-known Bitcoin detractor, named Nouriel Roubini, recently claimed that he believes that Bitcoin is the ‘mother of all bubbles,’ as well as that its price was pumped by the USDT of Tether. In one prepared testimony for a Senate Banking Committee Hearing, Nouriel, who is colloquially also known as Dr. Doom because of his seemingly permanent bearish approach, claimed that cryptocurrencies have no intrinsic value and even have started crashing this year.
In the testimony, he also argued that the crypto bubble grew late in 2018 as literally, every human being he has met between Thanksgiving and Christmas of last year asked him first if they should buy them.
Dr. Doom: Cryptocurrencies are not money
Dr. Doom also points out that the market now entered a crypto-apocalypse as this year most of the cryptocurrencies are importantly down after the bubble burst. Bitcoin, which is the flagship cryptocurrency, is now down nearly 80% from its mid-December all-time high near $20,000, according to the information from CryptoCompare data.
According to Dr. Doom, cryptos are not money as their prices are volatile and are not widely accepted. Their value went up in 2017 as investors were buying cryptocurrencies not to utilize in transactions, but as they expected them to increase in value.
Dr. Doom added that until now, the only real use of Bitcoin was to facilitate illegal activities like drug transactions, tax evasion, as well as avoidance of capital controls, or money laundering too.
In his approach, Dr. Doom further points out that cryptos do not have the ability to process as many transactions per second as traditional payment networks, and also claims that crypto proponents have turned to blockchain technology in order to argue that it is the cure of all global problems, which include poverty, famine, as well as diseases too.
According to his prepared testimony, blockchain technology is no more than a glorified spreadsheet or database. The professor of NYU points to the USDT of Tether, as well as some other stablecoins as the biggest scam of all.
“The mother of all manipulations.”
As Dr. Doom says, the “mother of all manipulations” in the crypto space – to which he refers to as crypto land – is actually related to Tether and Bitfinex. Both these companies share high-level executives, as well as the supply of USDT which was surging, even after Bitfinex saw Wells Fargo turn its back on it in 2017.
This also saw critics claim that the stablecoin was issued to pump Bitcoin, in that way helping it to reach its all-time high. In the testimony, the NYU professor mentions a study which was conducted by a professor from the University of Texas, named John Griffin, who suggested that the stablecoin was indeed used to manipulate the price of Bitcoin.
However, he failed to mention a study which was conducted by a researcher from the University of Queensland Business School, who has found that there was no evidence which connects the issuance of USDT tokens to the price rises of BTC. Interestingly, as it was said, the market factored in the risk through a price premium which in recent times, hit a 9-month high.
According to the testimony, Dr. Doom further points to a lack of security in the way in which cryptos work, calls decentralization a myth, as well as argues the tokenization of everything would lead us back to a world of barter. This among some other problems which include spoofing, wash trading, pump and dump schemes, and even more.
The reactions of the crypto community
Dr. Doom also sounded the alarm on Twitter, where a lot of crypto community members reacted to his points of view. Erik Voorhees, the CEO of ShapeShift, responded to his tweet which was about the testimony, by noting that fiat is the scam, and adding that some are building an alternative that he is not obliged to use.
Responding to some comments with regard of the potential of BTC to be a store of value after losing about 70% of its value in a few months only, Voorhees replied that those that wish to store value with Bitcoin can do so. And those that want to store value with USD fiat can also do so. USD has lost 98% of its value in the past hundred years, but people are free to keep holding it, but he prefers not to.
The director of digital asset strategy at New York-based investment management firm known as VanEck, named Gabor Gurbacs, said that his document was filled with uncorroborated and false statements, together with false information on criminal activity, scalability, as well as more.