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Dr. Eswar Prasad says BTC’s legacy will be blockchain technology

By:
on Dec 6, 2021
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  • According to Prasad, BTC will fail because it takes a toll on the environment and is not scalable.
  • While Prasad is a BTC skeptic, he claims DeFi’s promise using the blockchain is real.
  • Prasad believes central bank currencies will remain dominant as stores of value.

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Dr. Eswar Prasad, the Professor of Trade Policy at Cornell University, believes Bitcoin (BTC/USD) might fade away. However, he claims its underlying technology, the blockchain, will remain the cryptocurrency’s true legacy. He shared his sentiments during an interview earlier today.

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In the interview, Prasad said the blockchain is fundamentally transformative for the finance system. He believes the technology can improve daily transactions like buying houses and vehicles. Explaining why he is not a BTC fan, Prasad said the digital asset uses the blockchain inefficiently.

According to him, the flagship cryptocurrency uses a transaction validation mechanism that takes a toll on the environment. He also pointed out that the BTC network is not scalable. Due to these traits, he says BTC might not last much longer.

While he is a BTC skeptic, Prasad, who is also the author of The Future of Money: How the Digital Revolution is Transforming Currencies and Finance, said other cryptos are using the blockchain more effectively. While he did not mention any specific coins, he said the promise of decentralized finance (DeFi) using the blockchain is real. 

Investors should focus on the fundamental value propositions of cryptos

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Prasad further noted that investors should strive to find the fundamental value proposition of assets. He added that BTC does not serve well as a medium of exchange. To this end, the Cornell University professor does not believe it has any fundamental value apart from what investors think it has. However, he alleges that BTC has triggered an element of currency competition.

According to Prasad, the popularity of BTC led to the rise of stablecoins, which could create more effective means of completing transactions seamlessly. In turn, stablecoins have pushed central banks to mull the issuance of digital versions of their national currencies.

He added that this development has many perks, seeing as central banks would offer an additional payment option that features low cost and high accessibility. In so doing, Prasad says central banks would have the capacity to increase financial inclusion and stability.

Responding to whether central banks would allow independent competition regarding the use of digital currencies, Prasad said competition is a good thing from an economic point of view. He added that a bifurcation of the roles of money is likely. The Cornell University Professor concluded that central bank currencies would remain dominant as stores of value.

This news comes as BTC continues recovering its losses over the weekend. At the time of writing, BTC is up 2.78% over the past 24 hours to change hands at $50,429.45 (£38,034.14).

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