The old record financial experts: continuing the comparison of bitcoin with «bubbles» of the past

The rapid growth of bitcoin and other cryptocurrencies, along with their volatility, has again attracted the attention financial experts, including magnate and investor Carl Icahn (Carl Icahn), and Nobel laureate in Economics Robert Shiller (Robert Shiller).

In an interview with CNBC, Icahn, founder of Icahn Enterprises, admitted that he is not very versed in bitcoin, and added that he is «like a bubble». Stressing that he «doesn’t understand» the enthusiasm for bitcoin and other cryptocurrencies, he compared it with the land bubble of the 18th century, stating:

«John Lowe sold the land in Mississippi, which was absolutely useless, and the French paid for it, giving all his money. And once the bubble burst… that’s for me cryptocurrency».

The famous Mississippi bubble created by the Scottish economist and adventurer John law, essentially was that he was given the authority to open a company to control the trade lands in close proximity to the Mississippi river claimed by France. According to
historian John Moena (Jon Moen) from the University of Mississippi, Lowe financed company, which produced paper stock to investors who hope to profit «in gold and silver» are they bought that brought early investors profits of more than 1 900% in less than a year.

According to Moena, then many become millionaires, but it all went downhill, when people realized that most of the land is a useless swamps. Icahn believes that the same thing will happen with bitcoin, which rose over the year by 1 000%, as people will no longer see the value in it. However, it does not account for the fact that the growth of cryptocurrencies was accompanied by a sharp increase in its popularity. Icahn added:

«I will honestly tell you, I don’t understand cryptocurrencies. Apparently, I’m the last of those people. And I try to beware of what they don’t understand».

Robert Shiller: «bitcoin will not fall to zero, and the just fall»

Nobel laureate in Economics Robert Shiller (Robert Shiller) has also shared his opinion of bitcoin. He believes that crypto currency will collapse, like the collapse of the US stock market that preceded the «Great depression». Schiller compares the attraction to bitcoin with the plot «detective film», which attracts people who want to outsmart the system.

An economist from Yale University Robert Schiller won the Nobel prize in Economics in 2013. Its popularity partially stems from his predictions of the collapse of the bubble Internet companies and the housing market in 2000 he published a book called «Irrational exuberance», which describes in detail these failures.

At the conference in Vilnius, which was held last week, he said:

«Bitcoin is simply amazing. It gives the feeling that you’re the smartest, the fastest, and realized something that nobody else is aware of. And bitcoin seems to be anti-government and unregulated. This is such a great story. If only she was real.»

Schiller added that he does not know when the cryptocurrency will stop, but compared with the stock market in the 1920-ies. According to him, it will go up, but we «eventually come to 1929». He added that the cryptocurrency will fail, but «not up to scratch, she just strongly lose in the price».

In September of this year, Schiller had already expressed his opinion about bitcoin, calling it a «bubble».

Novogratz and Citigroup disagree

Legendary billionaire Mike Novogratz (Mike Novogratz) has repeatedly spoken out in support of bitcoin and other cryptocurrencies. He said that in some regions, the price of bitcoin really can be artificially inflated, but the bitcoin is not a bubble.

However, Novogratz noted that the bitcoin and cryptocurrency market could become the largest bubble «of our century.»

«I think that cryptocurrency will be the biggest bubble of the century. This is a bubble, and there are a lot of scams. We see a lot of different projects — some of them are well funded, although strongly reminiscent of a financial pyramid,» said Novogratz.

Novogratz also said that in the past there were a lot of bubbles around innovative and revolutionary technologies such as the Internet. For example, the bubble Internet companies. But the Internet itself was not a bubble. He changed jobs every industry in the world, revolutionize the communication and information processing.

The era of Internet companies was also filled with fraudulent projects, and now the environment of bitcoin and cryptocurrency. Inside the cryptocurrency market, there are many fraudulent companies and projects that operate as pyramid schemes, but there are real projects that benefit.

«Historically, bubbles and mania occur around things that are fundamentally changing our lives. Whether it is Railways or Internet – they radically changed our way of life,» said Novogratz.

In addition, as recent research by Citigroup, if some analysts chose to call bitcoin a bubble, we can say that virtually all of the technologies, companies and assets that have received considerable benefits are also bubbles. Over the past two decades analysts have argued that Amazon, Tesla, Facebook, UK real estate, used cars and other forms of investment are «bubbles».

In the study of Citigroup emphasizes that if bitcoin is considered a bubble, then everything else can be called a bubble.

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