UBS Chief Economist Paul Donovan was quoted as saying that “Bitcoin is denied to minority groups who have reduced online access.” The comments come in the wake of the decision by the Indian government to remove 500 and 1000 rupee notes from circulation, leading to a cash crunch that has crippled India’s economy. Donovan went on to say, “Bitcoin’s market cap is inflated by criminal groups who use it to get rid of the cash they make from their operations. The vast majority of people doing business in Bitcoin are doing so to hide money from the government, which makes it a bad commodity to be trading in.”
The chief economist at UBS, Switzerland’s largest bank, sees a number of problems with bitcoin. In an attempt to answer the question of whether cryptocurrencies defy time, he says bitcoin excludes minority groups with limited access to the internet.
UBS chief economist sees many problems with Bitcoin
Paul Donovan, chief economist at UBS Global Wealth Management, posted a weekly update on the UBS website on Friday titled Is Bitcoin Challenging the Zeitgeist? (Is Bitcoin Challenging the Zeitgeist?) in which he outlines some of the problems he sees with the crypto currency. UBS is the largest bank in Switzerland.
There’s something strange about Bitcoin. Bitcoin in particular seems to be defying the zeitgeist, unlike other cryptocurrencies, he began, adding:
Some people believe bitcoin is a safe haven against rapid inflation. But delivery control does not guarantee value… Bitcoin has always had large price fluctuations.
We cannot continue to live on ecological credit and must become increasingly sustainable, he continued, believing that bitcoin is increasingly destroying the environment – the more it is created and used, the more damage is done to the environment.
Moreover, he argued: Reducing inequality receives particular attention at the global level. Bitcoin ownership is very unevenly distributed. Ownership is concentrated in a small number of people and corporate governance is plutocratic rather than democratic. The Economist also notes:
Politicians and economists increasingly emphasize inclusion, but Bitcoin denies access to minority groups that have limited access to the Internet.
As for the timing, he concludes: The current trend that Bitcoin is embracing is the power of storytelling. Storytelling has had a major impact on the development of Bitcoin. Otherwise, bitcoin seems at odds with the zeitgeist.
Many bitcoiners have taken to social media to refute Donovan’s arguments. Max Kaiser, a supporter of bitcoin, wrote on Twitter: UBS does not understand the meaning of the word Zeitgeist. Faced with the existential threat of bitcoin – while the real zeitgeist turns against them – Paul Donovan reads boomer nonsense to an audience of geriatric bankers, hoping to save himself from extinction. It’s not gonna work. Another Twitter user agreed with him: I’m not sure you understand the meaning of the word zeitgeist – otherwise you’d say bitcoin is part of it.
As for Donovan’s statement about making bitcoin less accessible to minorities, many people have pointed out its hypocrisy. Another Twitter user noted:
Yes, of course, a bank account at UBS is more accessible to these poor minorities than a free Bitcoin wallet on a cheap Android phone.
Another pointed out several errors in Donovan’s claims, including the fact that UBS requires a balance of 10,000 Swiss francs … to have an open account. I think crypto currency and bitcoin people would agree that this is a barrier to the people you say you support.
In January, Donovan wrote that the cryptocurrency has a fundamental flaw and that a fixed supply of bitcoins could lead to a collapse in value and purchasing power.
What do you think of Paul Donovan’s opinion on Bitcoin? Let us know your comments in the section below.
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