Despite a spate of negativity stemming from Nobel economists stemming from Davos, there’s one holdout who has begun to show some interest. Robert Shiller, a Yale economics professor who won the Nobel Prize for an empirical analysis of asset prices, at the 2018 World Economic Forum in Davos, Switzerland referred to bitcoin as a “clever idea,” one that he seemingly continues to contemplate despite his doubts.
For all of bitcoin’s ingenuity, Shiller likened it to the Unidad de Fomento, Chile’s unit of account that he said reflects a similar attempt to “change” the fiat system. He actually favor’s the Chilean approach for features such as adjusting for inflation and maintaining price stability, the latter of which cryptocurrencies thus far have been unable to prove, to the chagrin of policymakers.
“I tend to think of bitcoin as an experiment,” he said. “It is an interesting experiment, but it’s not a permanent feature of our lives. We are over-emphasizing bitcoin, we should broaden it out to blockchain, which will have other applications,” said Shiller as cited in CNBC.
While Shiller’s curiosity about bitcoin may not be an about-face from recent comments that Shiller made on cryptocurrencies, it reflects a dose of moderation and certainly shows more constraint than some of his Nobel-economist winning peers. In recent days, Shiller, who is behind the famous Shiller Index, said he expected bitcoin would “collapse” and be forgotten” even if it took a century to do so. In the meantime, he’s sure warming up to the idea.
Shiller clearly has given bitcoin some thought, exploring its capacity for hedging/short trades but its inability to streamline these capabilities, sort of like some of the other inefficiencies tied to bitcoin such as lengthy transaction times, for instance. But he said he was “struck” by this phenomenon, which suggests Shiller, as an economist for asset prices, has contemplated bitcoin’s applications.
“Financial theory says that if something is not shortable then it can be taken over by enthusiasts, and the doubters can no longer have an adequate way of vetting against,” said Shiller, pointing to the advent of bitcoin futures contracts at Chicago’s CME and CBOE as a potential harbinger of more price stability.
Of course, Shiller’s characterization of bitcoin as an “experiment” is not inaccurate and would likely resonate with even blockchain veterans. Wences Casares, one of the foremost authorities on blockchain and bitcoin, in a recent chat with PayPal’s Schulman referred to bitcoin as an interesting experiment,” one whose odds are more in favor of succeeding than failing. But Casares also said you can’t separate the blockchain from bitcoin, which is a concept that Shiller doesn’t seem to grasp, at least not yet.
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