Famed economist Nouriel Roubini plans to strike a fiery tone on cryptocurrency and blockchain before a group of U.S. senators on Thursday.
Roubini will testify before the U.S. Senate Committee on Banking, Housing and Urban Affairs alongside Coin Center director of research Peter Van Valkenburgh in a hearing entitled âExploring the Cryptocurrency and Blockchain Ecosystem.â
Announced last week, the hearing marks the latest move by members of the U.S. Congress to better understand the emerging technology and asset class.
In prepared remarks published Wednesday, Roubini, who was given the nickname âDr. Doomâ for his predictions about the 2008 financial crisis, plans to come out swinging, arguing cryptocurrencies are not a viable unit of account, means of payment or store of value.
Among the arguments: Roubini contends that âwealth in crypto-land is more concentrated than in North Korea, where the inequality Gini coefficient is 0.86.â
The Gini coefficient is a measure of economic inequality and works by comparing income distribution (or possibly wealth distribution) among a population, according to Investopedia. The coefficient can range from 0, or perfect equality, to 1, or perfect inequality.Bitcoinâs Gini coefficient is 0.88, he said, though he did not reference how he established that number.
In contrast to Roubiniâs rhetoric on âa failing set of technologies,â Van Valkenburghâs prepared testimony argues that âdecentralized computingâ can prove beneficial in a number of different use cases, provided lawmakers and regulators allow developers to experiment with the technology and grow the space.
Van Valkenburghâs testimony pushes back against some of the hype surrounding the space as well, noting that blockchain âis notâ a âsolution to any number of social, economic, organizational or cybersecurity problems.â
It even goes as far as to say that the phrase ââblockchain technologyâ is a vague and undefined buzzword.â
His tone strikes a stark difference from Roubiniâs, calling for âa light-touch approachâ to regulation, similarly to how former U.S. President Bill Clintonâs administration approached the development of the internet.
Elsewhere, Roubini notes that âblockchains can make sense in cases where the speed/verifiability tradeoff is actually worth it,â but adds that âthis is rarely how the technology is marketed. Blockchain investment propositions routinely make wild promises to overthrow entire industries, such as cloud computing, without acknowledging the technologyâs obvious limitations.â
The Senate Banking, Housing and Urban Affairs Committee has discussed the cryptocurrency space before. Earlier this year, the committee saw U.S. Securities and Exchange Commission (SEC) chair Jay Clayton and Commodity Futures Trading Commission (CFTC) chair J. Christopher Giancarlo testify on what their agencies saw as pressing needs for regulating the space.
While Clayton said at the time that the securities regulator may ask for legislation approving additional oversight on the space, neither the request nor any such legislation has materialized to date.
In fact, while there are a number of bills sitting before the Senate and the House of Representatives, few have been signed into law so far.
That hasnât stopped startups from launching tokens or working toward building the âWeb 3.0,â inspiring much of Roubiniâs previous pushback.
Nor has Roubini held back in the run-up to the hearing.
On Twitter, the economist has blasted cryptocurrencies and the space in general, saying in one tweet that âDecentralization in crypto is a myth ⦠miners are centralized, exchanges are centralized, developers are centralized dictators (Buterin is âdictator for lifeâ).â
In another tweet, he piled on, saying that âcalling this crappy garbage of 1000s of alt-coins â that lost 99 percent of their value since peak â as âshit-coinsâ is a grave insult to manure that is a most useful, precious and productive good as fertilizer in agriculture. So apologies to manure for this offensive comparison.â
(He also apologized to the Senate committee for using the word âshitcoin,â but noted that it was a commonly used âtechnical termâ in the space, citing a Google search.)
On the other side of the debate, Van Valkenburgh concludes in his remarks:
âJust as few would have predicted the emergence of Facebook or Uber given only an understanding of the internet circa 1995, it is impossible to know what creative and diverse minds will build when offered a free and public platform for experimentation.â
Roubini image via Prometheus72/Shutterstock