[Bitcoin Now] Once Below 40 Million KRW... US Scholar Targets Bitcoin

Eswar Prasad, Professor at Cornell University, USA, "Bitcoin Harms the Environment and Fails to Guarantee Anonymity and Payment"
90% of Cryptocurrency Mining Companies Located in China Have Disappeared

▲Eswar Prasad, Professor at Cornell University, USA

[Asia Economy Reporter Gong Byung-sun] The representative cryptocurrency Bitcoin briefly fell below 40 million won. Eswar Prasad, a professor at Cornell University in the U.S. who served as the Chief of the IMF’s Monetary and Capital Markets Department and was responsible for China, criticized Bitcoin for harming the environment while lacking practicality.

According to the domestic cryptocurrency exchange Upbit, as of 9:24 PM on the 20th, Bitcoin recorded 39.78 million won, down 5.47% from the previous day. This is the first time since the 9th that Bitcoin’s price has fallen below 40 million won. At 10:02 AM on the same day, Bitcoin was priced at 41.74 million won.

Professor Prasad pointed out that Bitcoin harms the environment. On the 17th (local time), in an interview with U.S. economic media CNBC, he explained, “Bitcoin mining is clearly negative for the environment,” adding, “Ethereum, which uses a proof-of-stake method, has much lower energy intensity while providing the advantages of Bitcoin.” The proof-of-stake method differs from the proof-of-work method, where everyone participates in data management; instead, it grants authority to a few who hold a large stake of the cryptocurrency to manage the data.

Furthermore, Professor Prasad criticized Bitcoin for failing to guarantee the intrinsic value of anonymity and for being difficult to use as a payment method. He said, “The core value of Bitcoin is to provide anonymity, but if Bitcoin is used in real life, wallet addresses or physical identities eventually connect with the blockchain ecosystem,” adding, “Alternatives to Bitcoin are being sought for anonymity, but none have been realized yet.” Regarding Bitcoin’s use as a payment method, he pointed out, “It is slow and cumbersome, and the market is very unstable,” concluding that it is “not suitable as a medium of exchange.”

Not only Professor Prasad but also global scholars have criticized Bitcoin for some time. On the 24th of last month, Robert Shiller, a professor at Yale University, explained, “The value of cryptocurrencies is very ambiguous and is determined by crowd psychology rather than intrinsic value.” Paul Krugman, a professor at the City University of New York, also criticized, “Bitcoin was created to serve as money, but it fails to fulfill that role,” adding, “Investment in Bitcoin, which has no utility, is purely due to rising prices and is similar to a pyramid scheme.” Professors Shiller and Krugman were awarded the Nobel Prize in Economics in 2013 and 2008, respectively.

Meanwhile, it has been reported that most Bitcoin mining companies in China have been shut down. On the 21st, the English edition of China’s state-run media Global Times reported that Sichuan Province issued closure orders to 26 Bitcoin mining companies within its jurisdiction, and due to strong regulations, 90% of all mining companies in China have disappeared.

Until April last year, China was an important country in the cryptocurrency market, mining 65.08% of Bitcoin. However, as China prepares to issue its Central Bank Digital Currency (CBDC) and protect its financial sovereignty, it began sanctioning Bitcoin mining companies. On the 25th of last month, the Inner Mongolia Autonomous Region warned that not only cryptocurrency mining companies but also involved individuals and companies would be placed on a credit blacklist.