Outspoken Bitcoin and cryptocurrency critic and economist Dr Andy Xie, renowned for predicting the 1997-8 Asian currency crisis, told The Korea Times this week that Bitcoin is “a gambling instrument” primarily exploiting Asian investors and that it can never function properly as a currency.
“Bitcoin is primarily a gambling instrument for Chinese, Koreans and Japanese,” he said, adding,”Even though so many argue it could be used to replace the fiat currency, its huge volatility makes it impossible.”
According to his bio at the South China Morning Post (SCMP), Xie was managing director and head of the Morgan Stanley’s Asia-Pacific economics team from 1997 to 2006, was an economist for five years at the World Bank, and, in 2013, was voted one of the 50 most influential persons in finance by Bloomberg Magazine.
Xie said Bitcoin’s price received a boost recently from the announcement of Libra, a cryptographic payments network social media giant Facebook intends to implement alongside its social network.
Xie said he believes investors are likely confused about Libra’s significance with regards to Bitcoin:
“Facebook’s Libra should be bad for Bitcoin, because its launch will increase supply of a substitute. But its psychological effect is to remind people that it is becoming more legitimate. Hence, people go back in.”
In 2014, Xie wrote in SCMP that, “Bitcoin is a Ponzi masquerading as a futuristic currency. It was a small bubble until it found China last year.”
“Bitcoin was trying to join the internet bubble without much success,” he wrote. “In the West, bubbles are driven by money managers. Bitcoin is too crazy for them.”
Xie also wrote that China’s crackdown on Bitcoin, “was the beginning of the end,” for the network because, “no retail Ponzi scheme can last without the credulous and speculative masses in China.”
Xie was wrong about that, however.
Even though China has been progressive tightening its anti-crypto measures since December 2013, when local banks were banned from facilitating Bitcoin transactions, many believe Chinese crypto speculators have simply moved their business offshore and underground.
This means Asian investors continue to be prey to the American crypto traders Xie believes significantly control the markets, he told The Korea Times:
“Wall Street has set up a futures market in Chicago. The traders there could push it back when it is that high. They would push it down until the people in East Asia panic and run. Then they will square position to cash out.”
Those traders will do their best to conceal “the game” going on, said Xie:
“They are essentially making money from East Asia. They will make it in such a way to keep the game going. East Asians lose about $100 billion in gambling every year.”
Eventually, said Xie, Bitcoin and crypto gambling will cut into the market share at casinos:
“Cryptos are taking over the business. Eventually, you will see physical casinos closing down.”