Bitcoin will “totally collapse” says Nobel prize-winning economist

A Nobel prize-winning economist has said Bitcoin will not be “permanent feature” of the financial world and is likely to “totally collapse”. 

Speaking at the World Economic Forum in Davos, Robert Shiller said that while he was impressed by the cryptocurrency, it reminded him of “tulip-mania” that once occurred in The Netherlands.

“It reminds me of the Tulip mania in Holland in the 1640s, and so the question is did that collapse? We still pay for tulips even now and sometimes they get expensive. (Bitcoin) might totally collapse and be forgotten and I think that’s a good likely outcome but it could linger on for a good long time, it could be here in 100 years,” Shiller told CNBC at Davos.

“I tend to think of bitcoin as an experiment. It is an interesting experiment, but it’s not a permanent feature of our lives,” said Shiller, who has previously warned that the bitcoin price could collapse. “We are over-emphasising bitcoin, we should expand it out to blockchain, which will have other applications.”

The virtual currency remains a hot topic at the World Economic Forum this year.

Theresa May expressed concerns about the anonymous nature of the currency and its association with criminal activity.

“In areas like cryptocurrencies, like bitcoin, we should be looking at these very seriously,” the Prime Minister said in an interview held in Davos.

Many financial experts expressed concerns about the cryptocurrency, particularly with South Korea’s plans to crack down on its trading. 

My number one focus on cryptocurrencies, whether that be digital currencies or bitcoin or other things, is that we want to make sure that they’re not used for illicit activities,” said the US treasury secretary, Steven Mnuchin.

“So in the US our regulations [say] if you’re a bitcoin wallet, you’re subject to the same regulations as a bank,” he added.