Jim Chanos Is Not Convinced About Bitcoin Legitimacy
Though the attention for cryptocurrency is growing around the world, there are some experts who are not convinced about the new age currency. They are also not convinced about bitcoin emerging as a single biggest currency in about a decade. The predictor of Enron fall, Jim Chanos, has joined the list of persons who are not in favor of any digital currency though they could not do anything to prevent their wider acceptance. That is mainly because the latest generation is willing to take some risks since there are no other investment avenues to generate the kind of returns that virtual currencies offered.
Security Speculation Game
In an interview to the Institute for New Economic Thinking, Chanos said that the cryptocurrency is nothing but a security speculation game due to technological infiltration into monetary policy. He is not the only person to view the digital coin as a fraud. During the early part of the current year, a number of analysts and financial experts have warned that those who are dealing with the virtual currencies are only engaged in gambling. Significantly, Chanos comments assumed significance since he teaches on the financial fraud history at Yale University.
Interest for cryptocurrency has surged strongly after bitcoin price reached close to $20,000 around Christmas last year. He termed the growing interest as “fraud cycle.” Investment guru, Warren Buffett, pointed out earlier that digital currency does not produce anything and the price increases mainly on the expectation that someone will pay a higher price. Chanos challenged the store-of-value case in respect of any virtual currency. Instead, he believes that “apocalypse” food could perform better as a means of currency, according to CNBC. The short seller also expressed his comments against bitcoin earlier too terming it as “speculative mania.”
Chanos could not understand as to how bitcoin could be compared with that of “digital gold.” Some of the optimists see the digital coin as a store of value due to its restricted supply. Incidentally, Apple co-founder, Steve Wozniak, compared the virtual currency with the phrase of “pure digital gold” only recently.
The short seller indicated that “Bitcoin is still the area for people who are trying to avoid taxation or other examinations of their transactions. That’s one thing where I think it probably still has utility, but the government has figured that out.” His comments would not be liked by optimists who think that bitcoin is a viable currency. He thinks that it could appeal to those who are eager to dodge government.
Craze for Fundraising
Following the significant increase in most of the digital currencies price, there is a craze for fundraising through initial coin offerings (ICOs). That also allowed some fraudsters to make use of it through the SEC has cracked its whip on them. In 2017, as much as $6.6 billion was raised through the ICO and the current year has already seen $9.1 billion.
Chanos suspect that the market could see more questionable companies making use of the bull market in the cryptocurrency space. That means plenty of work for SEC that indicated digital coin as security.