Nouriel Roubini: 99% of crypto is a scam
Economist Nouriel Roubini calls out crypto 'crooks' at the World Economic Forum in Davos Switzerland. You can see the entire interview here
Key Video Takeaways:
00:04: 99% of crypto is a scam
01:06: You have to stay away from Crypto
01:19: I'm skeptical even about blockchain
02:31: Blockchain is a fad and it's totally useless technology
NOURIEL ROUBINI: FTX and SBF are not an exception. They are the rule. Literally, 90% of crypto is a scam, criminal activity, total really bubble Ponzi scheme is going bust. I mean, Madoff had a Ponzi scheme. A few people lost their shirts. FTX alone was 1 million customer.
In the US alone, there are 40 million people who have invested into crypto, mostly young people or people who have lower income or minorities. And none of them, 99% of them, did not buy Bitcoin at 1,000 or even 10,000. Most of them got FOMO 2021 when it was skyrocketed from 20 to 30 to 50 to 69. And 99% of them bought well above the current market value. So they lost their shirt.
It's a nightmare, and that's just Bitcoin alone. The other ones have fallen by 90%, 95%. Out of 20,000 ICOs, officially 80% were a scam. And another 17% have gone to zero. So that means 97% of them, means almost, like, what, 19,300 out of 20,000 were either a scam or lost everything. You have to stay away. You have absolutely stay away. And most of these people belong literally in jail. Literally, they're all crooks.
- Is there a case for blockchain as a technology platform separate entirely from crypto?
NOURIEL ROUBINI: I'm skeptical, even about blockchain. I think it's the most hyped technology ever because you cannot create essentially trust with technology alone. I'll give you an example. They say put on a blockchain global supply chains, making sure that your tomatoes at Whole Foods are organic. But how do you know? Because you put it on the blockchain? No. Whole Foods has to send some people on the farms to make sure they are not using pesticides, GMOs, and so on, and then do the other tests in the store to make sure that whatever they've tested there is still there.
After you have tested and you ensure that tomato are organic, you can put on a centralized database that is good and cheaper than DLT. So the idea that DLT can create trust is impossible because in reality you need always some credible institution that validates transaction. Once you have done that hard job, then put in a centralized database.
So most of what they call actually blockchain is blockchain in name only. It tends to be private, not public, centralized, not decentralized, permission, not permissionless, and based on trusted validators rather than a trustless system. So it's not blockchain. It's a glorified database. So Google Docs is a permissioned database, and everybody's using it. Nobody is calling the blockchain because it's not blockchain. So blockchain is a fad. And it's totally useless technology and wastes a lot of energy.