A Cornell University economist says the promise of decentralized financial (defi), using blockchain technology, is real but may not last as long. Nonetheless, he admitted bitcoin “has really set off a revolution that ultimately might benefit all of us either directly or indirectly.”

Economics Professor Doubts the Future of Bitcoin, Praises Define

Eswar Prsad, Cornell University professor of economics, spoke about bitcoin, cryptocurrencies and blockchain technology in a recent interview published by CNBC.

Prasad is the Nandlal Pa. Tolani senior professor of commerce policy and professor of economics in the Charles H. Dyson School of Applied Economics and Management, Cornell University. He was previously the chief of the Financial Studies Division in the International Monetary Fund’s Research Department and the IMF’s China Division.

He stated that blockchain technology would be “fundamentally transformational” in finance and the way we conduct day-to-day transactions.

The promise of decentralized finance using blockchain technology is a real one but bitcoin itself may not last that much longer.

The professor of economics explained that Bitcoin’s use blockchain technology isn’t very efficient. It uses an environmentally harmful validation mechanism that doesn’t scale well .”

He claimed that newer cryptocurrencies use blockchain technology more efficiently than bitcoin.

” With any assets, it is important to ask where the fundamental value proposition is,” he said, adding:

Given that bitcoin is not serving well as a medium of exchange, I don’t think it’s going to have any fundamental value other than whatever investor’s faith leads it to have.

He then discussed currency competition and stablecoins. It has created an interesting aspect of currency competition. He explained that stablecoins are now available and could in principle create more efficient ways to transact in basic ways.”

The professor said that cryptocurrencies had “lit a flame under central banks to begin thinking about issuing digital copies of their own currencies .”

Professor Prasad stated that central bank digital currencies, or CBDCs, “could have many benefits in terms of providing an extra payment option, a low-cost payment option that everyone has access to, increasing financial inclusion, and possibly also increasing financial stability .”

He concluded:

Much as you might not like bitcoin, it has really set off a revolution that ultimately might benefit all of us either directly or indirectly.

Do you agree with Professor Eswar Prasad? Please let us know your thoughts in the comments below.

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