MUMBAI: Bitcoins operate on a technology with some fundamental value, but besides that, it comes close to gambling, said Gita Gopinath, John Zwaanstra Professor of International Studies and Economics, Harvard University. She ruled out the possibility of the upcoming cryptocurrency ever becoming a medium of exchange.
“There’s a technology that goes behind it that’s making the financial world very excited about it. But besides that, it comes close to gambling,” she said, adding, “I don’t believe that it will be a medium of exchange or become a currency, because the minute there’s a possibility, regulation will step in. Right now, it’s used for activity with not the best tags on them (drug peddlers etc).”
Delivering the Exim Bank of India’s commencement day annual lecture on ‘Dollar Dominance in Trade: Facts & Implications’ here on Thursday, Gopinath said bitcoins right now is in a speculative bubble. “There’s some fundamental value in terms of technology, but the pricing seems speculative,” she said. Meanwhile, according to Gopinath, the prevailing downturn in Indian exports has something to do with disruption caused due to GST, but longer-term picture appears better as GST is likely to get streamlined by the end of 2018.
Stating that the slowdown in the GDP was an aberration due to reforms (some disruptive) undertaken last year, Gopinath said, “India should grow way better than world growth, as it has a lot of potential. The expectation is that world growth will be slightly higher and 2018 looks promising for advance and emerging economies.”
She also dismissed US Treasury’s concerns if they should charge India as a currency manipulator in late October when India’s forex reserves shot up to $400 billion. “It’s crazy. Identifying a country as currency manipulator based on reserves accumulation is, in my opinion, bad economics,” she said.