Two prominent market voices squared off Wednesday over the future of cryptocurrencies in a debate that ended with a bet over a T-shirt.
Economist Nouriel Roubini, who for many years wore the sobriquet “Dr. Doom,” said bitcoin and its peers don’t even deserve to be called “cryptocurrencies.” Investor and former hedge fund manager Michael Novogratz said Roubini is underestimating the sector’s future, and challenged him to put his pride where his mouth is.
“Bitcoin is at $6,000 now,” Novogratz told Roubini during a panel discussion at the SALT 2019 conference in Las Vegas. “If at Christmastime it’s above $6,000, you have to wear a shirt that says, ‘I love bitcoin.’ If it’s not, I will wear a T-shirt saying, ‘Nouriel was right.'” (Bitcoin traded around $5,885 Wednesday afternoon and is off 37% over the past 12 months.)
Roubini didn’t directly respond to the challenge, and in fact said he doesn’t care about bitcoin’s fate.
However, he earlier launched a barrage of criticism against the $186 billion industry, saying its products like bitcoin and ethereum lack the fundamental qualities of currencies and shouldn’t be labeled as such.
“Crypto is the mother and father of all bubbles,” he said.
The term “cryptocurrency is totally a misnomer,” he later added. “To be a currency, you have to be a unit of account, valuable and a scalable means of payment.”
Bitcoin can’t be scaled efficiently as it’s only capable of seven transactions a second, whereas credit cards can handle thousands of transactions in the same time, he said. It’s too volatile to be a stable store of value, and is easily susceptible to fraud like spoofing, pump-and-dump schemes and front running on prices.
“I’ve never seen such a level of manipulation,” said Roubini, whose remarks drew a round of audience applause. “The reality is, these are not currencies.”
Novogratz, who has been a crypto backer for years, disagreed.
Pointing to bitcoin’s price recovery after a vicious tumble in 2018, the former head of Fortress Investment Group said bitcoin still has widespread acceptance and interest.
“The realty is there’s a tremendous amount of stuff going on. In some ways, there’s been a small miracle,” Novogratz said. “The debate is over, bitcoin won. It is now seen by people all around the world as a legitimate place to [store] their value.”
Novogratz pointed to crypto endeavors being implemented or considered by businesses as diverse as Fidelity and Facebook.
“So that’s bitcoin. I think it’s got a very healthy future,” he said. “My sense is it’s going to continue to march higher.”