Mohamed A. El-Erian Tackles The Bitcoin Controversy

Mohamed A. El-Erian

WHOA! Normally opinions from others mean nothing to me (unless I agree with them of course) BUT when Mohamed A. El-Erian speaks…….I listen up. Is Bitcoin legitimate? Is it here to stay? Lets find out. So, without further ado, get in on the debate by starting with a super piece to read.
(Bill Taylor/CEO)


“Instead of bringing clarity, an impressive price surge last week accentuated the differences within the financial industry about the future of the bitcoins. Opinions range from those asserting that we are witnessing the birth and maturation of a new global currency to those who argue that the phenomenon is a “fraud,” with a large middle either reserving judgment or arguing that it will last but currently may risk being in the midst of a speculative price bubble.

Your position in this debate will depend to a significant extent on where you come out on the following three issuesThe number of dedicated holders versus the number of momentum and speculative investors:

  1. Bitcoins have loyal followers who believe that the future of mediums of exchange and stores of value is in currency constructs that are outside the purview of governments and central banks. They also have confidence that the technological underpinnings of cryptocurrencies give these a unique and lasting advantage.
  2. There are no firm indicators of how large this base of dedicated holders is relative to traders who are temporarily — and, until now, very profitably — on the bitcoin bandwagon. The smaller the dedicated base, the greater bitcoins’ vulnerability to a speculative bubble that will eventually pop, delaying the structural and secular maturation of cryptocurrencies.
  3. The prospects for widespread adoption:
    The answer to the first question will depend in part on where you come out on the issue of how fast bitcoins will be adopted by a broader population of users, whether for transactions or as a saving vehicle. Here, again, opinions are varied…”

Full OpEd by Mohamed A. El-Erian at Bloomberg.com