Governance Crisis leads Forbes Columnist to Believe Bitcoin Will Head to Zero
An analyst has sounded the death bell for Bitcoin in an article published February 12, 2018. Posted on Forbes online, Adam Ozimek has again bet against bitcoin, speculating that the worst is far from over.
Pointing to the recent 50 percent tumble in value as indicative of a nightmare stock, not a “storehouse of value,” Ozimek reiterated his previous predictions that, it must be said, were not just well-informed but also spot on at the time. On December 16, 2017, he very accurately predicted a huge pop for bitcoin as it was streaking to all-time highs.
A Novel Asset’s Momentary Volatility or a Nail in Bitcoin’s Coffin?
Of course, Ozimek himself may be succumbing to a moment’s available leverage, casting aspersions on the cryptocurrency after an extremely volatile few months. It remains to be seen whether this volatility is something bitcoin and other cryptocurrencies will slowly shed as their core transactional value becomes vested in the global marketplace.
That said, his is an extremely respectable voice and his working life is spent in an extremely relevant environment – Ozimek is a Moody’s analyst. In the article, he also draws on his peers’ observations and quite eloquently points to fundamental differences in ultimate value between Ethereum’s ether and bitcoin. Saying that “this sort of volatility undermines the fundamental value and usefulness of Bitcoin,” Ozimek outlines certain inescapable fundamentals when comparing the coins.
Quoting Eli Dourado, a longtime commentator and possibly even more qualified voice on cryptocurrency matters, he points to necessities of a currency that bitcoin is currently struggling with and that Ethereum seems far more willing and able to address.
As a means of currency, Ozimek has his money squarely on Ethereum and went on to paraphrase Dourado as saying that “I no longer believe there is a stable place for bitcoin, ripple, or most other cryptocurrencies that exist today.” Dourado is a Ph.D. and a recognized expert in the field, having coauthored the New Palgrave Dictionary of Economics cryptocurrency chapter.
Bitcoin Weighed Down by Transaction Fees, Governance, Scalability
Ozimek is not a doomsayer on a soapbox, but rather describes himself and Dourado as “[optimistic] about the potential for cryptocurrencies.” Mentioning transaction fees (notably lower with Ethereum), quality of governance and scalability as inescapable fundamentals with which Ethereum leads the pack, he paints a rather bleak picture of bitcoin as a currency, regardless of trading highs and lows.
Reminding readers of the debacle when high transaction fees contributed to “the Bitcoin conference famously and hilariously [having] to stop taking bitcoin payments for ticket[s],” the man makes a strong point.
It has been apparent that dreams of wealth and general FOMO (fear of missing out) have stimulated radical volatility in bitcoin’s price during 2017, but Ozimek speaks of fundamental value. That is the kind that will persist in the application as an improvement on modern life, once all the dust has settled.
For Ozimek, it all hinges on good governance and seamless application. While Bitcoin’s persistent scaling issues were initially appraised as just a minor glitch to get through, they are now starting to weigh the coin down.
Saying that “From Eli’s analysis, it seems that governance quality is a key competitive advantage for a cryptocurrency,” Ozimek predicts a terminal downturn for bitcoin. “As early as September 2015, I was concerned about Bitcoin governance quality,” he added. He revealed that Bitcoin’s “core development team has been captured by an ideological faction committed to only off-chain scaling in the name of decentralization.”
Ozimek concluded: “Governance institutions are especially important for cryptocurrencies because they can’t be simply copied. Good governance—like good culture at a company—is a challenge to develop, and once you lose it, it’s hard to get it back.”
Willy Woo, Tom Lee Remain Bullish
Despite Ozimek and Dourado’s respective credentials, there remain scores of other prominent bitcoin analysts that shrug off the volatility as Bitcoin’s teething phase.
Among them is Willy Woo, a much-followed analyst of crypto-assets, who tweeted on February 11 that bitcoin had bottomed. NVT signal, which is an indicator designed by Woo based on value flowing through the blockchain has been fairly accurate in calling out tops and bottoms for bitcoin prices so far.
In addition, Tom Lee who is one of the earliest positive advocates of bitcoin tweeted the following statement just six hours before the time of writing, expressing an almost unquestionable rise for bitcoin looming.
“From speaking/hearing from our clients, most see a “w” bottom and retest. The downdraft was impossible for many to avoid and they are now licking their wounds. And discretionary macro traders pulled plug early last week. So consensus not expecting bottom in—case for a “V”?”
From the contrasting opinions above, it is clear to be seen that there is no definitive direction that bitcoin will take.