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Critic of Bitcoin’s ‘one-percenters’ still positive about future of digital assets

A future without digital assets is hardly imaginable but Bitcoin (BTC) is far from being perfect by design, according to a finance professor at the London School of Economics (LSE).

LSE financial professor Igor Makarov believes that digital money and digital assets will undoubtedly be part of the future of finance and their efficiency will depend much on their design.

In an interview with Cointelegraph, Makarov said that there has not been much evidence that Bitcoin can become a store of value as it has been extremely volatile over the past 10 years.

Since Bitcoin’s volatility remains high despite its massive rise in value and increased liquidity, there is no guarantee that its price will become more stable one day, he said.

“Without any government backing Bitcoin, the cryptocurrency’s value depends on the willingness of the general public to hold it, which in turn depends on changing investor sentiment and its standing against other cryptocurrencies,” Makarov stated.

The professor also assumed that allowing United States public institutions to invest in BTC would almost certainly result in a “temporary price appreciation.” However, this appreciation will mean that early adopters benefit “at the expense of the general public” and other stores of value, especially fiat currencies, Makarov said, adding:

“Since Bitcoin is an unproductive asset — given its current design — its returns come entirely from price appreciation and in the long run we should not expect them to exceed the growth rate of aggregate output.”

Makarov is known for co-authoring a study claiming that 10,000 Bitcoin investors, or 0.01% of all BTC holders, own 5 million BTC, which accounts for 25% of all mined 19.1 million bitcoins currently in circulation. The analysts argued that top BTC holders control a bigger share of crypto than the richest Americans control dollars.

According to Makarov, the study is based on Bitcoin network data as well as public data from blogs, chat forums and others. “We also use Bitfury Crystal Blockchain information about identity of large public…

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