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Digital currencies can survive if they embrace the rule of law, says leading economist and professor at New York University’s Stern School of Business, Nouriel Roubini.
The economist, who is known as “Dr. Doom” for his pessimistic predictions about the economy, including in 2008 when he famously predicted the housing bubble crash, believes that legal institutions will help bring reliability to cryptocurrencies.
Nouriel says AML and KYC legislation will be crucial to the acceptance of Bitcoin by legacy financial systems. “You need regulation, you need that credibility, but you build it by having institutions,” he says.
The importance he places on the rule of law is one subject which he and Dr. Craig Wright, the inventor of Bitcoin, agree on. The two men shared a stage together at CoinGeek Zurich last week, where they discussed the role of Bitcoin in our financial system and the digital asset market.
During his combative keynote speech, Nouriel argued that cryptocurrencies are weakened by a lack of regulation. He explains further to Charles Miller, on this week’s episode of CoinGeek Conversations, that he thinks there needs to be an international agreement on the regulation of cryptocurrencies to ensure we don’t end up with a “law of the jungle.”
Nouriel also agrees with Dr. Craig Wright on the legal benefits of Bitcoin being a pseudonymous currency, rather than an anonymous one, saying “law enforcement prefers people using Bitcoin rather than an offshore financial centre for a variety of criminal activities.”
This is because every Bitcoin transaction is recorded on the blockchain, a permanent and public ledger, which anyone can access. This means transactions are traceable, public keys can be identified and criminals can be connected to digital wallets, bursting with ill-gotten gains.
This was proven last week in the United States, when the FBI traced $2.3 million worth of Bitcoins, extorted by a criminal hacking group known as DarkSide. The money, paid in ransom by Colonial Pipeline, was not only found but seized by federal investigators.
This will help to prove the legitimacy of digital currencies and shift the image of Bitcoin as the currency of choice for criminals, especially when combined with regulation.
While Nouriel is no convert to Bitcoin SV just yet, it seems that the attractive regulatory framework BSV is building, the proven traceability of digital assets and the contempt for BTC that he shares with those working in the BSV ecosystem, could lead to a change of perspective from “Dr. Doom” in the future.