Atulya Sarin’s wild claims that Bitcoin will soon be worthless should not be dismissed, says one of the world’s leading crypto analysts.
Sarin – Professor of Finance at California’s Santa Clara University – announced earlier this week that he believed the leading cryptocurrency is currently in its death throes.
The well-respected academic was widely derided on social media, but one expert – eToro’s senior market analyst Mati Greenspan – is urging the crypto community to take Sarin’s criticism on the chin and use it to improve Bitcoin.
When Bitcoin was topping more than $6,500 earlier this year, Sarin published an article suggesting the rising cost of mining was jeopardising any hopes of crypto having a future in the financial world. He also blamed bearish investors for destroying the market.
Now, with Bitcoin hanging around $3,700, the West Coast professor has fuelled the debate once more by provocatively announcing BTC was heading for “a swift and painful drop to zero”.
“Unlike gold, which can retain its value even if mining activity stops, Bitcoin can have no value absent the mining activity that maintains the ledger of who owns it,” he said in his Marketwatch column.
“Absent the mining activity, Bitcoin is just a set of encrypted numbers with no value.
“Many will argue that Bitcoin becoming truly worthless is extreme. Sure, looking at some memorable fads and bubbles, tulips still trade for $10 a bunch and Beanie Babies are fairly priced at $5.
“I can still give my wife a bouquet of tulips and make her happy. And I can still give Beanie Babies to my grandchildren to play with. But what am I going to do with a set of numbers that I cannot prove makes me an owner of anything?”
However, rather than add to the groundswell of anti-Sarin feeling on social media, Mati Greenspan is urging people to use the comments to help improve cryptocurrencies.
Speaking to the Daily Express, eToro’s senior market analyst said Sarin’s opinion should be viewed as “a useful question”.
“Look, put it this way, this Bitcoin death spiral concept is nothing new, and many people have had the same theory for years,” he told the UK daily newspaper.
“The theory is, basically, if you have a sudden drop in hash rate, it will drive the miners away, meaning no one would mine Bitcoin any more and no transactions would ever be made.
“But that’s just nonsense, and it’s an easy way of attacking Bitcoin while it’s down.”
The Israel-based expert also batted away Sarin’s thoughts on the loss of miners.
“The pie always remains the same size – one block produced every ten minutes or so – regardless of however many miners there are,” he added.
“But we shouldn’t laugh at Atulya Sarin because Bitcoin goes through cycles, and we can all increase our knowledge of every aspect of that cycle while people like this raise excellent questions about Bitcoin.
“The most important thing we can do is find answers to these questions so that when it comes up again in a few years – which I guarantee it will – we have a very good answer at the ready.
“I’m well aware that Prof Sarin’s theory is designed to be provocative and support his own thoughts on Bitcoin, but he is – perhaps inadvertently – giving us the tools to make Bitcoin even better.”