Nobel Prize in Economics: BTC is not a store of value and gold is a “terrible” hedge against inflation

The 2013 Nobel Prize in Economics, Eugene Fama, considered the “father of modern finance”, argued that Bitcoin (BTC) would have value “if used as currency”. However, he noted that its volatile nature diminishes its viability as a traded asset.

Eugene Fama pointed out the following on Bitcoin on Kitco News:

“This is a case where the market has failed to realize that Bitcoin is worthless. At the moment, I guess even thieves don’t make transactions and preserve it. They will trade with it and then quickly abandon it for another type of asset because it is too risky to hold it for the long term. Bitcoin has a very volatile price”.

Source : Youtube

Eugène Fama is not the only Nobel laureate to have criticized Bitcoin. In May, Nobel laureate in economics Paul Krugman also expressed his doubts about the benefits that BTC produces in the real world, arguing that for him: “Bitcoin did not work in El Salvador”, which “n ‘failed’ to promote the cryptocurrencygood that she has been made legal tender.

“Bitcoin has been around for 13 years now, an eternity on a technological scale. It has attracted a fanatical base, despite repeated attacks from skeptics, who still wonder what problem Bitcoin solves. We then retort to the skeptics that they are only dinosaurs who do not understand”.

The usefulness lies in the constant use of BTC, which “the asset does not have”

For the 2013 Nobel Prize in Economics, he also criticized the current behavior of gold, since the asset has also demonstrated that it presents a “terrible hedge” against inflation or because its price is “too ​variable” in relation to goods and services. Eugène Fama also spoke about inflation and the state of the dollar, noting that the situation is “worrying”.

“To deal with inflation, the Fed used to reduce its supply of reserves. But now the FED thinks that by raising interest rates, people will be less willing to hold other assets… But the question is, how high will that interest rate be?


The Nobel laureate pointed out that BTC will acquire “true value” when the asset is used for conventional transactions, but given its volatile nature, people “shouldn’t use it.”

“It’s just a term (Bitcoin) that we can give value to because it’s usually in transactions and its supply is limited, so in that case it can have value. The question is, will people transact through a payment method like this? It has such volatile value. Monetary theory says that a unit of account only survives if it has a fairly stable real value and its real price cannot rise and fall dramatically. This is not the case with Bitcoin”.


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