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Highlights
- One of the world’s leading economists, Tyler Cowen, believes most economists haven’t followed crypto closely.
- One of the major criticisms of crypto is that it’s just a bubble waiting to burst, not unlike the dot com bubble in the early 2000s.
- Cowen admits that most crypto assets are likely to disappear, but major cryptos like Bitcoin will survive.
Cryptocurrency has moved further into the mainstream over the past two years with major companies and even countries adopting the new technology.
Whilst that had been happening, a debate has raged over whether this new realm of digital currency is a legitimate part of economics or whether it’s just a passing fad.
Let’s find out what do economists think of cryptocurrency?
What do economists think of crypto?
One of the world’s leading economists, Tyler Cowen, a professor at George Mason University, who co-founded popular blog, MarginalRevolution, believes most economists haven’t followed crypto closely.
Cowen, himself, says he is pro crypto despite initially being a skeptic of the burgeoning industry. Cowen says that he’s now more hopeful on what benefits crypto can provide the larger economy and says he’s impressed by the high amount of talent in the crypto space.
Despite his own optimism, Cowen believes the wider economic industry is largely uninterested due to the lack of professional incentive to spend their time thinking about crypto.
Is Crypto just a bubble?
One of the major criticisms of crypto is that it’s just a bubble waiting to burst, not unlike the dot com bubble in the early 2000s.
For those who are unfamiliar, the dot com bubble saw a rapid increase in the share price of tech companies throughout the late 1990s and early 2000s.
In the five years from 1995 to 2000, the share price of tech companies grew massively, with the Nasdaq index rising from under 1,000 to more than 5,000.
By 2002, however, the bubble burst, leading to shares of tech companies to plummet. Many economists believe crypto is just another version of the dot com bubble.
Cowen believes that this is not the case with crypto due to the fact that crypto prices have already taken a big hit before witnessing some pull back, suggesting that crypto is here to stay for the long term.
Indeed, one only has to look at the price of Bitcoin over the past year as evidence for Cowen’s argument.
In the middle of last year, Bitcoin lost more than half its value after a period of growth throughout the previous four months which saw it reach its then highest price of US$63,500. Despite the drop, Bitcoin rallied against it throughout the latter months of 2021 before dropping again in November. Since then, it’s slowly been regaining ground.
Cowan admits that most crypto assets are likely to disappear, but major cryptos like Bitcoin will survive.
Bottom Line
It’s difficult to determine exactly where crypto will be in 10 years. Despite this, it seems plausible, at least to some economists that crypto is here to stay in the long term.
