Nouriel Roubini, who earned the title “Dr. Doom” after predicting the 2008 financial crisis, acknowledges the financial industry is indeed going through a revolution. However, he holds that this revolution is not being driven by bitcoin or any other blockchain application.
The Future of Finance
Debating panelists who included Ethereum co-founder, Joseph Lubin, in the presence of blockchain enthusiasts at the Fluidity Summit in Williamsburg, Brooklyn, Roubini sustained his attack on the cryptocurrencies and the technology that powers them, blockchain.
According to Roubini, Big Data, Internet of Things (IoT) and Artificial Intelligence (AI) are the forces that are driving financial revolution. The New York economist holds that numerous businesses are utilizing these tech innovations and still managing to disrupt the finance industry. They include WeChat Pay, PayPal, Venmo and Alipay which are being used by billions of people every day.
In his view, cryptocurrencies and blockchain have no role in shaping the future of finance.
He said, “I’m affirmative on that significant disruption, but most of this has nothing to do with blockchain, nothing to do with cryptocurrency.”
Lubin disagreed with Roubini’s sentiments and chose to explain the broader thesis of blockchain-driven change. He said, “We’re building systems that are fundamentally, atomically about collaboration.”
Roubini is opposed to the concept of decentralization in cryptocurrencies, alleging that groups such as exchanges and miners have too significant an influence on the direction that protocol development takes.
Four Dimensions of Centralization in Decentralized Crypto
“The whole point of the crypto world is to say we don’t believe in central banks, everything is going to be decentralized but I honestly see just totally opposite occurring in crypto-land, and I think there are four dimensions of it in which there is centralization,” Roubini continued.
Centralization of mining: Dr. Doom met with the head of one of the largest mining company who told him that they control 25 percent of all mining of bitcoin and 40 percent of Ethereum, so where is decentralization?
Complete centralization of exchanges: 99 percent of all crypto transactions are occurring in centralized exchanges which are hackable and even decentralized ones have been hacked.
Centralization of all development process: Few developers are deciding together all the platforms all the protocols and so on. (like Vitalik Buterin?)
The concentration of Wealth: The Gini (income inequality) coefficient for Bitcoin wealth is 0.88, while that of U.S is less than 0.5 and North Korea, where Kim Yong owns everything, is 0.86.
“You’re going into a world of ‘The Flintstones’ or barter. It’s totally inefficient. It’s never going to work.”
Despite the heated exchange, there was a feeling that panelists who favored cryptocurrencies acknowledged that the systems are not perfect yet. Lubin, for instance, agreed with Roubini on a few issues. On mining, he said, “I agree that the mining systems are susceptible to centralization.”
Terming the new protocol “an economic bond on the blockchain,” Lubin argued that the protocol will be more secure compared to bitcoin’s proof-of-work (PoW) system.
Other panelists who spoke earlier in the event discussed challenges that decentralization poses to the cryptocurrency industry. Gnosis co-founder and CTO, Stefan George explained the frustrations crypto companies face working with a large number of wallets whose configurations differ.
According to him, the industry needs to agree on a single API to address this problem.
Days before the Fluidity Summit, Roubini spoke in Los Angeles during the Milken Institute Global Conference and lanced a similar sentiment to describe bitcoin and blockchain that cryptocurrency enthusiasts won’t soon forget.
He argued that blockchain is not decentralized because crypto holders have to clear transactions through centralized exchanges.
“There is no decentralization, it’s just bulls–t,” he said, terming blockchain a “glorified Excel spreadsheet.”
This was not the first time Roubini had expressed a contrary opinion about blockchain and the pioneer cryptocurrency. On February 2, 2018, he termed bitcoin “the mother of all bubbles” arguing that blockchain technology and digital currencies cannot change the world.
Source: BTC Manager