Dr. Nouriel Roubini, Professor of Economics at New York University’s Stern School of Business and former senior economist for international affairs on the White House Council of Economic Advisors, was a keynote speaker at the recently concluded CoinGeek Conference held at Samsung Hall in Zurich, Switzerland, on June 8-10, 2021. During a panel discussion hosted by Bitcoin Association Founding President Jimmy Nguyen on the supposed value of Bitcoin (BTC), Roubini presents why he thinks cryptocurrencies, such as BTC, cannot be considered a currency. The panel is completed by nChain Chief Scientist and Bitcoin white paper author Craig S. Wright, former trader, risk specialist and best-selling author Nassim Nicholas Taleb, and financial cryptographer Ian Grigg.

According to Roubini, BTC and other cryptocurrencies do not have the qualities of a currency, such as a stable store of value relative to price indices, hedge against risk of episodes and a single numeraire for market price comparison, and they exist within an irrational bubble. Therefore, it cannot be used as a unit of account and considered a currency. Roubini further expounds that BTC can only process seven transactions per second (tps) due to its unscalable network; hence, it cannot also be used as a global currency or as a payment system like VISA, for instance, that processes 27,000 tps.

And BTC also cannot be used as payment because its volatility opens it up as a risk to vendors. Something that goes up and down in value, like when BTC dropped 50% in value and other top cryptocurrencies crashed 65% during the start of the pandemic, cannot be considered a currency. And tokenization only eliminates the single numeraire that a currency needs, effectively negating the advancements in the history of money.

“The trouble is in the crypto space where there are thousands and thousands of different currencies and different tokens—as far as I can tell, there are 10,000 of them—and most of them are essentially created as a way of essentially saying, ‘If you want to buy my goods or if you want to buy my service, you have to use this particular token. But think of it this way, suppose that in order to buy a bottle of Coca Cola, I need to use a Coca Cola token and in order to buy a bottle of Pepsi Cola, I need to buy a Pepsi Cola token. Then, I cannot even compare the relative price of two goods. There is no price transparency, there [are] price scales. We need a single numeraire,” Roubini passionately explained.

To this, Wright promptly replies that the original Bitcoin as he wrote it is not a cryptocurrency, but digital cash that makes possible fast, easy and cheap transactions. Bitcoin was not designed to replace money or banks, but to improve the system. Wright’s vision has always been for Bitcoin to be used as plumbing for various systems, meaning people will not even know they are using it whenever they pay or create various transactions.

“When you’re buying web pages, when you’re buying things, well, you need an underlying platform. And we can do it cheaper than the banks can do it themselves. So, my answer is economies of scale. What are we going to do? I’m not talking about selling you a token to watch the money go up in price. I’m talking about utility. I’m talking about getting the U.S. Fed; I’m talking about getting the Euro; I’m talking about getting other countries to build their system to actually issue digital currency that is cash,” Wright clarified.

“I think if you want the original Satoshi paper to succeed, what we’ve learned is that what you call digital cash must be stable cash… If you manage that, then a system for peer-to-peer transactions would have a good chance,” Taleb added.

With BSV restoring the original Bitcoin design and unlocking unbounded scalability, it has allowed for microtransactions at a current median fee of $0.00009 per transaction, which is expected to be lowered when nanotransactions become available in the near future when Teranode is released. It can be said that BSV has the best chance of becoming the plumbing of the digital world.

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