The chief economist for Dutch banking giant ING believes bitcoin will likely wind up as a niche financial product, according to a new report.
In a report from Dec. 18, ING’s principal economist Teunis Brosens argued that actual use of the cryptocurrency will be limited to “tech nerds, people obsessed about their privacy, [and] people afraid of (hyper) inflation of traditional currencies,” among others.
“In the long term, bitcoin has little to offer to a wider audience, and will likely return to being a niche product for a select group of enthusiasts,” he wrote.
Bronsens’ opinion is perhaps at odds with other pronouncements about bitcoin in recent days, which has seen its price trade in excess of $18,000 amid the launch of derivatives contracts on regulated exchanges in the U.S.
Indeed, he argued that some of bitcoin’s characteristics that are often cited as strengths – the lack of a central intermediary, for example – would keep it out of arm’s reach from a more mainstream audience. He also posited that the price volatility around bitcoin makes it a poor method of payment for most consumers.
“For bitcoin to function as a means of payment, it needs to be stable. A world in which your money buys you a large latte today, but only a small espresso tomorrow, is hardly convenient,” he wrote.
While the economist’s commentary mostly focused on bitcoin, he also extended his criticism to cryptocurrencies in general, arguing that one of their core features – being open source – is also ill-suited for mass-market use.
“While cryptocurrencies do compete with each other for users, and can create value for their users by providing an extensive network of other users, they are not able to create unique value for their users by being a distinctive platform with special features not found elsewhere,” Brosens wrote in the report.
While casting a critical eye on bitcoin, Bronsens struck a largely positive note about blockchain, writing:
“Blockchain is an impressive technology that may bring progress to a variety of fields, ranging from finance to health care, and from notary to voting. Long live the blockchain.”
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