Bitcoin is a terrible currency, says top economist

The Street

Dr. Burton Malkiel, American economist and author of 'A Random Walk Down Wall Street,' joined TheStreet to discuss what he thinks of the crypto craze.

Transcript

00:00 Is there any piece of investment advice that you hear now or ever on that's just a real pet peeve

00:05 of yours that drives you crazy? Well, I will give you an example now where people are pouring money

00:17 into what is a speculative asset class and where I think a lot of people are likely to be hurt.

00:30 And that is Bitcoin. The problem I think is that in some sense Bitcoin is a terrible currency to use.

00:46 Why would I want to go and buy my cup of Starbucks coffee with a currency that's up $2,000 or down

00:58 $2,000 in a single day and I have no idea how many Bitcoin I'm going to have to use to buy my cup of

01:06 coffee. In some sense it's so volatile it's not really a useful currency. The problem is that it

01:16 is useful for some purposes. If I wanted to trade in drugs I think I would be absolutely delighted

01:28 to use Bitcoin where my purchases and sales would not be known to my credit card company or to my

01:45 banker. Or if I had gone into the computer system of a company and basically had

02:02 programmed it so it wouldn't work anymore and I insisted on being paid a huge sum to unclog their

02:15 computer system. In other words ransomware. If I were in the business of ransomware I think Bitcoin

02:23 would be a terrific currency to use. So there are uses and that's ultimately I think going to be

02:32 Bitcoin's downfall because governments are not going to allow that to keep on happening. So I

02:46 think there's just enormous risk involved in Bitcoin. People say Bitcoin will be fine because

02:55 there's a limited amount. There's not a limited amount of cryptocurrency. There are many other

03:01 cryptocurrencies and there'll be many more in the future. I'm not against technology. There will be

03:08 government cryptocurrencies. But I think a lot of people are ultimately going to get very hurt

03:16 by Bitcoin which is now playing with a new high. And I can assure you if it goes up to a new high

03:27 you're going to draw people in the FOMO crowd. I can't miss this and I'm afraid a lot of people

03:35 are going to be hurt. So if I had something to suggest where I'm really worried and what I think

03:45 is actually the most bubbly of anything in the market that's the area that I would pick. I have

03:54 no idea where Bitcoin is going. Could it go to $100,000? Absolutely. Could it go to $200,000?

04:01 Absolutely. But what I am sure of is that a lot of people who think they know exactly what it's

04:11 going to do, I'm afraid a lot of people are going to get hurt.

04:15 [BLANK_AUDIO]

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