A Cornell University economics professor says the promise of decentralized finance (DeFi) with blockchain technology is real, but Bitcoin may not hold out much longer. However, he admits that Bitcoin “has really started a revolution that can ultimately benefit us all, directly or indirectly.”

Professor Eswar Prasad

Economics professor doubts the future of Bitcoin, praises DeFi

Eswar Prasad, Professor of Economics at Cornell University, gave a talk on Bitcoin, Cryptocurrencies, Blockchain, DeFi and Central Bank Digital Currencies (CBDCs). interview recently announced with CNBC, yesterday (December 17th).

Prasad, author of The Future of Money: The Digital Revolution Transforming Money and Finance, is a Senior Professor of Trade and Economic Policy at Cornell University. Previously, he was head of financial research on China at the International Monetary Fund (IMF).

Noting that blockchain technology will “transform the fundamentals” of finance and the way we conduct our daily transactions, he added:

“The promise of decentralized funding using blockchain technology is real, but Bitcoin itself may not last long.”

“Bitcoin’s use of blockchain technology is not very efficient,” explains the Cornell University economics professor. It uses an environmentally damaging authentication mechanism (means PoW algorithm)“.

He claims that there are newer cryptocurrencies that use blockchain technology much more efficiently than Bitcoin.

“With any asset, the question is what the underlying value is,” he added:

“Bitcoin is not a good medium of exchange, I don’t think it goes beyond investor trust that is what makes it.”

He went on to discuss the competition between traditional currencies and stablecoins. “There is an interesting element of competition that stablecoins can in principle create more efficient trade routes than traditional routes.”

The professor added that cryptocurrencies “made central banks think about issuing digital versions of their own currencies”.

Professor Prasad explains that CBDCs “in many ways can be good at providing an additional payment option, an inexpensive payment option accessible to all that increases financial inclusion and potentially increases financial stability”.

“They don’t like Bitcoin sometimes, but it really created a revolution that we can all benefit from, directly or indirectly,” he concluded.

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