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Cryptocurrencies have grown into a global phenomenon, garnering attention from investors, economists, and governments. As the popularity of digital currencies like Bitcoin BTC/USD and Ethereum ETH/USD hasskyrocketed, some experts are questioning their long-term impact on the global economy.

CitingCharles Kindleberger's "Manias, Panics, and Crashes(which, in-part, examines the cryptocurrency market as a mania) and author Robert McCauley's take that cryptocurrency is "the most speculative asset ever invented by the human mind,"Dieter Wermuth, economist and partner at Wermuth Asset Management, said in a Wednesday note to investors that several economists of the European Central Bank have raised concerns about the long-term consequences of cryptocurrencies.

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Economists have argued that cryptos are not a viable alternative to regular money, but rather an asset without substance, a system for insiders to get rich quick, and a haven for money launderers, tax evadersand other dubious characters. Additionally, economists have pointed out the massive energy consumption ofdata centers that power the crypto ecosystem, which, in turn, has contributedto climate change.

Despite the initial narrative that Bitcoin would be a better, more stable currency than traditional money, Wermuth said the cryptocurrency has proven to be inadequate in fulfilling the three essential functions of money: as a means of payment, a unit of accountand store of value.

Bitcoin's volatility, slow and expensive transaction processes,and limited acceptance as a form of payment inherently makes it a poor substitute for traditional fiat currencies, he added.

As a store of value, Bitcoin is particularly deficient, Wermuth explained. It has no inherent value, no interest paymentsand no promise to redeem the purchase price or nominal value. This makes it impossible to calculate a "fair" price, rendering Bitcoin a purely speculative asset, he said.

If market participants lose faith in its potential for price appreciation, Bitcoin could simply vanish, he warned.

From a macroeconomic perspective, Wermuthsaid Bitcoin and other cryptos are "a negative-sum game," causing a significant waste of resources.

The socially undesirable redistribution of wealth, the high income earned by those dealing in a fundamentally useless asset, the facilitation of money laundering and tax evasionand the environmental costs associated with running the IT systems all contribute to a net loss for the economy, he explained.

Ultimately, Wermuth said the global economy might be better off without cryptos, allowing for more funds to be directed towards consumption and investment.

Read Next:Here Are 3 Reasons Why The US Dollar Isn't Going Away, Despite BRICS Ambitions

Photo: Shutterstock

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NY Attorney General files lawsuit to recoup $2.2M in crypto lost to job scam

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NY Attorney General files lawsuit to recoup .2M in crypto lost to job scam

Victims in New York were promised “well-paying, flexible jobs,” only to be tricked into a crypto scam, according to New York Attorney General Letitia James.

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Donald Trump’s Middle East envoy pushes for Gaza ceasefire deal ahead of US inauguration

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Donald Trump's Middle East envoy pushes for Gaza ceasefire deal ahead of US inauguration

Donald Trump’s Middle East envoy has met Israel’s prime minister in an effort to secure a ceasefire deal in Gaza before the president-elect takes office on 20 January.

Benjamin Netanyahu’s office confirmed details of the meeting with Steve Witkoff on Saturday, adding that the head of the Israeli Mossad intelligence agency has been deployed to Qatar in order to “advance” talks.

It was not immediately clear when David Barnea would travel to Doha for the latest round of indirect discussions between Israel and Hamas.

Earlier on Saturday, an Israeli official said some progress had been made, mediated by Egypt, Qatar and the United States, to reach a deal in Gaza.

Israel's Chief of the Mossad David Barnea and Security Agency director Ronen Bar attend a memorial ceremony of the Hamas attack on October 7 last year that sparked the ongoing war in Gaza, at the Mount Herzl military cemetery in Jerusalem on October 27, 2024. GIL COHEN-MAGEN/Pool via REUTERS
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Ronen Bar (left), director of Israel’s security agency, and David Barnea (right), head of Mossad, at a ceremony marking the 7 October Hamas attack. File pic: Reuters

The mediators are making renewed efforts to halt fighting in Gaza and free the remaining Israeli hostages held there before Mr Trump takes office.

A deal would also involve the release of some Palestinian prisoners held in Israeli jails.

Families of Israeli hostages welcomed Mr Netanyahu’s decision to dispatch the officials, with the Hostages and Missing Families Forum Headquarters describing it as a “historic opportunity”.

Mr Witkoff arrived in Doha on Friday and met the Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani, Qatar’s foreign ministry said.

Egyptian and Qatari mediators received reassurances from Mr Witkoff that the US would continue to work towards a fair deal to end the war soon, Egyptian security sources said, though no further details were released.

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Israel launched its assault on Gaza after Hamas fighters stormed across its borders in October 2023, killing 1,200 people and taking more than 250 hostages, according to Israeli figures.

Families of the roughly 100 hostages still held in Gaza are pressing Mr Netanyahu to reach a deal to bring their loved ones home.

Since then, more than 46,000 people have been killed in Gaza, according to Palestinian health officials, with much of the area destroyed and gripped by a humanitarian crisis, with most of its population displaced.

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Pope Francis honoured by Joe Biden with Presidential Medal of Freedom with Distinction

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Pope Francis honoured by Joe Biden with Presidential Medal of Freedom with Distinction

Pope Francis has been honoured with America’s highest civilian award by President Joe Biden, who has described the pontiff as “a light of faith, hope, and love that shines brightly across the world”.

It is the first time Mr Biden, 82, has given the Presidential Medal of Freedom with Distinction during his four years in office.

In a statement, the White House said the award is “presented to individuals who have made exemplary contributions to the prosperity, values, or security of the United States, world peace, or other significant societal, public or private endeavours”.

Mr Biden had been scheduled to present the medal to Pope Francis, 88, in person on Saturday in Rome on what was to be the final overseas trip of his presidency. But the president cancelled his visit to monitor the California wildfires.

The White House said Mr Biden bestowed the award during a phone call in which they also discussed efforts to promote peace and alleviate suffering around the world.

President Joe Biden presents Bono with the Presidential Medal of Freedom. Pic: AP
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President Joe Biden presented Bono with the Presidential Medal of Freedom. Pic: AP

President Joe Biden presents the Presidential Medal of Freedom to Denzel Washington. Pic: AP
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Denzel Washington was also recognised. Pic: AP

President Joe Biden presents the Presidential Medal of Freedom to Michael J Fox. Pic: AP
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Michael J Fox was bestowed with the honour. Pic: AP

The award can be presented with or without distinction.

Mr Biden presented the medal of freedom – without distinction – on 5 January to several people including fellow Democrat Hillary Clinton, humanitarian and U2 singer Bono, fashion designer Ralph Lauren and actors Michael J Fox and Denzel Washington.

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‘I could have beaten Trump’

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Mr Biden himself is a recipient of the award with distinction, recognised when he was vice president by then president Barack Obama in a surprise ceremony eight years ago.

President Barack Obama presents Vice President Joe Biden with the Presidential Medal of Freedom during a ceremony in the State Dining Room of the White House in Washington, Jan. 12, 2017. (AP Photo/Susan Walsh)
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Barack Obama presented Joe Biden with the Presidential Medal of Freedom with Distinction in 2017. File pic: AP

The citation for the pope’s honour said his “mission of serving the poor has never ceased”.

“A loving pastor, he joyfully answers children’s questions about God. A challenging teacher, he commands us to fight for peace and protect the planet. A welcoming leader, he reaches out to different faiths,” it added.

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