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Bitcoin Worthless in Apocalypse Scenario, Short Seller Jim Chanos Says

Cryptocurrency NewsJun 06, 2018 06:40AM ET
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Bitcoin Worthless in Apocalypse Scenario, Short Seller Jim Chanos Says

Jim Chanos, president and founder of financial advisory group Kynikos Associates, has voiced his skepticism on the legitimacy and intrinsic value of Bitcoin, the largest cryptocurrency in existence. Chanos, who is best-known as an ardent short seller, says the digital currency is a speculation game that poses under the guise of technological disruption. He also notes Bitcoin is not a good method to store value as it would fail during a crisis.

In an interview for the Institute for New Economic Thinking, the investor said:

“This is simply a security speculation game masquerading as a technological breakthrough in monetary policy. Someone at Grant’s interest rate conference recently said that it was as if we had intentionally created a ‘monetary Somalia.’”

Chanos, who anticipated the crash of energy giant Enron Corporation, believes the hype around Bitcoin and cryptocurrencies can fall under what he calls a “fraud cycle.”

Bitcoin is considered by many a safe-haven asset or a store of value that could work well during financial crises. However, Chanos doesn’t view it as an instrument for storing value, stating that during a potential apocalypse, food would have more value than Bitcoin.

“Because for those who believe that you need to own digital currency as a store of value in the worst-case scenario, that’s exactly the case in which a digital currency will work the least. Food would work the best,” he said.

The short seller, who also lectures on the history of financial fraud at the prestigious Yale University, said that Bitcoin is often used by those who want to avoid taxation or conduct hidden transactions. However, the people who believe the digital currency offers a means of avoiding government supervision are wrong anyway as “the governments have figured that out.”

Chanos also touched on the subject of initial coin offerings (ICOs), a form of cryptocurrency-based fundraising preferred by many startups today since they are simpler than IPOs and free of regulation.

“I suspect going forward we're going to see more and more evidence of questionable companies as this bull market keeps advancing and aging,” the investor said.

Even though Chanos is not alone in his negative stance on Bitcoin, it is worth mentioning he is a short seller “by nature,” suggesting that he would always focus on the problems and mistakes of any discussed object of investment interest. However, he is not always right. For example, Chanos has had a negative outlook for China’s real estate market since 2009, but nothing has crashed since then.

So far on Wednesday, Bitcoin has gained 2.22% to reach $7,610.


This article appeared first on Cryptovest
Bitcoin Worthless in Apocalypse Scenario, Short Seller Jim Chanos Says
 

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