Bitcoin has been on a tear, ripping past $70,000 on Friday, a new record high for the world's largest crypto. While Bitcoin has seen more mainstream adoption, there are still some skeptics. Dr. Burton Malkiel, American economist and author of 'A Random Walk Down Wall Street,' joined TheStreet to discuss what he thinks of the crypto craze.
Full Video Transcript Below:
SARA SILVERSTEIN: And is there any piece of investment advice that you hear now or ever? That’s just a real pet peeve of yours that drives you crazy?
DR. BURTON MALIKEL:
Well, I will give you an example now where people are pouring money into what is a speculative asset class and where I think a lot of people are likely to be hurt, and that is Bitcoin.
And the problem, I think, is that in some sense, Bitcoin is a terrible currency to use. Why would I want to go and buy my cup of Starbucks coffee with a currency that’s up $2,000 or down $2,000 in a single day and I have no idea how many Bitcoin I’m going to have to use to buy my cup of coffee. In some sense, it’s so volatile, it’s not really a useful currency. And the problem is that it is useful for some purposes.
If I wanted to trade in drugs, I think I would be absolutely delighted to use Bitcoin where my purchases and sales would not be known to my credit card company or to my banker, or if I had gone into the computer system of a company and basically had programmed it so it wouldn’t work anymore. And I insisted on being paid a huge sum to unclog their computer system. If, in other words, ransomware, if I were in the business of ransomware, I think Bitcoin would be a terrific currency to use.
So there are uses and that’s ultimately, I think, going to be Bitcoin’s downfall because governments are not going to allow that to keep on happening. So I think there’s just an enormous risk involved in Bitcoin. People say Bitcoin will be fine because there’s a limited amount, there’s not a limited amount of cryptocurrency.
There are many other cryptocurrencies and there’ll be many more in the future. I’m not against technology. There will be government cryptocurrencies, but I think a lot of people are ultimately going to get very hurt by Bitcoin, which is now playing with a new high. And I can assure you if it goes up to a new high, you’re going to draw people in the FOMO crowd. I can’t miss this and I’m afraid a lot of people are going to be hurt. So if I had something to suggest where I’m really worried and what I think is actually the most bubbly of anything in the market, that’s the area that I would pick. I have no idea where Bitcoin is going. Could it go to $100,000? Absolutely, could it go to 200,000? Absolutely. But what I am sure of is that a lot of people who think they know exactly what it’s going to do, I’m afraid a lot of people are going to get hurt.
