Dubai - Joseph Stiglitz said some people will gain profits, but on average many people will lose and "will end up in tears"
Published: Tue 12 Dec 2017, 7:22 PM
Updated: Wed 13 Dec 2017, 12:31 AM
Nobel laureate Joseph Stiglitz said Bitcoin has no social value as a currency and warned those who will jump in mining the cryptocurrency will most "probably end up in tears".
Speaking at the Arab Strategy Forum in Dubai on Tuesday, Stiglitz, a renowned economist and Nobel Prize winner in economics, said "some will definitely gain profits from Bitcoin but the whole idea of mining bitcoin that works on finite numbers is creating artificial scarcity."
The artificial scarcity is the main reason that the price of Bitcoin will rise to unreasonable and irrational levels, he added.
Bitcoin bulls have predicted its price will push to as high as $20,000 (Dh73,400) over the next few days. On Monday, Bitcoin has reached a record high of over $17,000 (Dh62,390) after hovering around $14,000 (Dh51,380) levels over the weekend.
In this volatile scenario, Stiglitz said some people will gain profits but on the average many people will lose and "will end up in tears".
Stiglitz noted that the dollar is still the perfect currency to buy goods and services.
Bitcoin, which works on a network of peer-to-peer transactions, can only gain currency if it is exchanged. He added that despite the relative anonymity offered by Bitcoin, when people are using Bitcoin, state departments and governments will have to regulate the cryptocurrency and ask where is the source of the money used to buy a Bitcoin.
In the same topic for the 'State of World Economy in 2018', Stiglitz also talked about US president Donald Trump in the era of globalisation.
He said Trump has completely "bastardised" the definition of gobalisation, noting that the American president has been complaining that the US is a victim of 'unfair global economic relations'.
Stiglitz said that Trump is portraying globalisation as the cause of the growing rate of unemployment in the US while on the other side of the economic spectrum, developing economies are complaining of the rapacity of US economy.
"How can globalisation be both disliked in the US and developing countries?," Stiglitz said.
"In my book, the problem of unemployment in the US was not brought about by globalisation but by big corporations.
"The median income of the American middle class has not changed in the past 42 years; and the purchasing power of those in the bottom of the economic spectrum is still the same as 60 years ago. Moreover, the life expectancy among uneducated white males is declining."
Stiglitz noted that globalisation will move forward with or without leaders like Trump.
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