Dr. Burton Malkiel, American economist and author of 'A Random Walk Down Wall Street,' joined TheStreet to discuss what he thinks of the crypto craze.
Category
🥇
SportsTranscript
00:00 Is there any piece of investment advice that you hear now or ever on that's just a real pet peeve
00:05 of yours that drives you crazy? Well, I will give you an example now where people are pouring money
00:17 into what is a speculative asset class and where I think a lot of people are likely to be hurt.
00:30 And that is Bitcoin. The problem I think is that in some sense Bitcoin is a terrible currency to use.
00:46 Why would I want to go and buy my cup of Starbucks coffee with a currency that's up $2,000 or down
00:58 $2,000 in a single day and I have no idea how many Bitcoin I'm going to have to use to buy my cup of
01:06 coffee. In some sense it's so volatile it's not really a useful currency. The problem is that it
01:16 is useful for some purposes. If I wanted to trade in drugs I think I would be absolutely delighted
01:28 to use Bitcoin where my purchases and sales would not be known to my credit card company or to my
01:45 banker. Or if I had gone into the computer system of a company and basically had
02:02 programmed it so it wouldn't work anymore and I insisted on being paid a huge sum to unclog their
02:15 computer system. In other words ransomware. If I were in the business of ransomware I think Bitcoin
02:23 would be a terrific currency to use. So there are uses and that's ultimately I think going to be
02:32 Bitcoin's downfall because governments are not going to allow that to keep on happening. So I
02:46 think there's just enormous risk involved in Bitcoin. People say Bitcoin will be fine because
02:55 there's a limited amount. There's not a limited amount of cryptocurrency. There are many other
03:01 cryptocurrencies and there'll be many more in the future. I'm not against technology. There will be
03:08 government cryptocurrencies. But I think a lot of people are ultimately going to get very hurt
03:16 by Bitcoin which is now playing with a new high. And I can assure you if it goes up to a new high
03:27 you're going to draw people in the FOMO crowd. I can't miss this and I'm afraid a lot of people
03:35 are going to be hurt. So if I had something to suggest where I'm really worried and what I think
03:45 is actually the most bubbly of anything in the market that's the area that I would pick. I have
03:54 no idea where Bitcoin is going. Could it go to $100,000? Absolutely. Could it go to $200,000?
04:01 Absolutely. But what I am sure of is that a lot of people who think they know exactly what it's
04:11 going to do, I'm afraid a lot of people are going to get hurt.
04:15 [BLANK_AUDIO]