'Blockchain is a Lie', 'Operated By Authoritarian Kleptocracies', Dr. Roubini Claims

Omar Faridi
  • 15 Oct 2018
  • Dr. Nouriel Roubini believes cryptocurrencies have "collapsed" because they are all "scams."
  • Roubini now thinks blockchain technology will "die" because it has "not even improved on the standard digital spreadsheet" which was available in 1979.

Dr. Nouriel Roubini, a New York University (NYU) professor and renowned economist, recently published a blog post on Project Syndicate titled: “The Blockchain Lie.” In his post, Roubini wrote that the value of some major cryptocurrencies has now dropped by as much as 99% and “the techno-utopian mystique of so-called distributed ledger technologies (DLT) should be next.”

Crypto "Scoundrels"

The Harvard Phd added that crypto firms and other market participants, which he refers to as “scoundrels”, have “fled to [their] last refuge.” According to Roubini, the last resort for crypto companies currently struggling with capital will be to “defend blockchain technology.”

While some cryptocurrency skeptics may be critical of cryptocurrencies, many have praised blockchain technology and also called it revolutionary. However, Roubini has said on many occasions that the distributed ledger is just a “glorified spreadsheet.

As described by the New Keynesian economist: 

[Blockchain is] a byword for a libertarian ideology that treats all governments, central banks, traditional financial institutions, and real-world currencies as evil concentrations of power which must be destroyed.

Nouriel Roubini

 

While this might be somewhat of an accurate description of how some Bitcoin (BTC) maximalists might think, it is definitely not how all other cryptocurrency enthusiasts think or believe.

XRP Is Bank Friendly

In fact, the XRP cryptocurrency developed by Ripple Labs and other financial products introduced by the American fintech are intended to make cross-border bank-to-bank transactions faster and more cost-effective.

So, Ripple’s approach is not to challenge, or get rid, of the existing financial system, but rather to add value and improve it using cryptographic technology. Despite this being very obvious, Roubini wrote: 

[A] blockchain fundamentalists’ idea world is one in which all economic activity and human interactions are subject to anarchist or libertarian decentralization.

Nouriel Roubini

Roubini continued:

They would like the entirety of social and political life to end up on public ledgers that are supposedly ‘permissionless’ (accessible to everyone) and ‘trustless’ (not reliant on a credible intermediary such as a bank).

Nouriel Roubini

As most crypto industry professionals and even some casual observers would know, there are now thousands of different blockchain projects and not all of them aim to be “permissionless” and “trustless” DLT platforms.

Notably, the concept and implementations of blockchains, or digital distributed ledgers, does vary from one organization to another. This also does not mean that everyone in the crypto community thinks all transactions should be easily traceable on the blockchain - which is why there are so many privacy-oriented coins such as Monero (XMR), Bitcoin Private (BTCP), among others.

While it seems to be very clear that Roubini’s opinions or viewpoint may not be entirely accurate, he wrote: 

Blockchain has given rise to [a type of] economic hell … [as many of its participants] pretend to be messiahs for the world’s impoverished, marginalized, and unbanked masses [and] claim to have created billions of dollars of wealth out of nothing. But one need only consider the massive centralization of power among cryptocurrency ‘miners,’ exchanges, developers, and wealth holders to see that blockchain is not about decentralization and democracy; it is about greed.

Nouriel Roubini

Buterin Reveals His Cryptocurrency Holdings

It appears that Roubini might particularly be referring to Ethereum co-founder Vitalik Buterin’s decision to keep 0.9% of the Ether (ETH) supply, which is referred to as a pre-mine. As Buterin clarified, he no longer owns 0.9% of Ether’s circulating supply, as that was what his share was when the Ethereum blockchain was first launched.

Moreover, the Russian-Canadian programmer shared a link to an etherscan address (presumably belongs to him) which has a balance of about 365,000 ETH - an amount valued at around $77 million at press time.

Buterin further claims he owns an “insignificant” amount of other digital tokens while also revealing that he has approximately a $100,000 investment in OmiseGo (OMG) - a payment network and decentralized exchange (DEX) built on Ethereum.

Based on the financial information Buterin has disclosed, it seems that the Ethereum developer might never have “come close” to a personal net worth of $1 billion - as Roubini has alleged. When accused of acting “criminally” by pre-mining digital currency by Roubini, Buterin also responded by saying it was not illegal to do so.

In addition to basically repeating himself numerous times about what he believes is going on in the crypto space, he now claims: 

No serious institution would ever allow its transactions to be verified by an anonymous cartel operating from the shadows of the world’s authoritarian kleptocracies. So it is no surprise that whenever ‘blockchain’ has been piloted in a traditional setting, it has either been thrown in the trash bin or turned into a private permissioned database that is nothing more than an Excel spreadsheet or a database with a misleading name.