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Bitcoin is a bubble - Nobel Laureate in Economics

Published time: January 24, 2014 10:45
Robert J. Shiller, Sterling Professor of Economics at Yale University attends a session at the annual meeting of the World Economic Forum (WEF) in Davos January 24, 2014. (Reuters / Denis Balibouse)

Robert J. Shiller, Sterling Professor of Economics at Yale University attends a session at the annual meeting of the World Economic Forum (WEF) in Davos January 24, 2014. (Reuters / Denis Balibouse)

Robert Shiller, 2013 Nobel Prize winner in Economics, and an expert in the nature of market excesses, has come down on bitcoin and said that the tremendous jump of the virtual currency was a 100 percent bonified “bubble”.

"It is a bubble, there is no question about it.... It's just an amazing example of a bubble," the Business Insider quotes Shiller, talking to the World Economic Forum in Davos, Switzerland.

“I’m amazed by how people are so excited about it and I tell my students ‘no, it's not such a great idea’," the economist said.

Last year bitcoin grew tremendously in popularity: even universities in the UK and Cyprus began to accept the currency as a means of paying for tuition.

Most recently, two Las Vegas casinos started to accept bitcoin for goods and services.

Over 2013 bitcoin skyrocketed 6,200 percent, and is now being traded at about $950 per unit, according to data from Mt Gox, the world’s second largest bitcoin exchange.

The jump, though, is logical, as it simply follows human nature which is always interested in high-volatile markets, Shiller said. He agreed the online currency was an “inspiration” because of fast-developing computer science, adding the caveat that he didn’t quite see it that way. The Nobel Laureate pronounced that bitcoin was a return to the dark ages because at present there is very little clarity surrounding the crypto currency.

Robert Shiller, Yale Professor of Economics, and two other professors from the University of Chicago - Eugene Fama and Lars Peter Hansen - won the Nobel Prize in 2013 for their research into market prices and asset bubbles.