Kenneth Rogoff, economics professor at Harvard University, looks at the future of bitcoin technology, but believes that the digital currency itself is a bubble that will crack. He writes in a chronicle published via Project Syndicate.
He points out that the underlying technology can, among other things, be used to combat cyber attacks which today constitute the main threat to the stability of the global financial system.
With that said, Kenneth Rogoff still estimates that the recent price increase for bitcoin is unmotivated. A collapse in the price is what he sees when countries begin to introduce ever-increasing regulations to virtual currencies.
Kenneth Rogoff writes: It's stupid to believe that bitcoin will ever replace money sent by central banks.
He says that it's a matter for governments to allow small anonymous transactions with virtual currencies, it would certainly be desirable. But it is a completely different issue when governments should allow large anonymous payments, which would make it extremely difficult to collect taxes or counteract criminal activity.
Bitcoin, which has been robust during the year, has seen countries react differently to the currency. While China and Russia have taken a skeptical stance and tried to control it, Japan has been more open and considering its own virtual currency. Sweden and India have also talked about launching own national digital currencies.
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