Mohammad El-Erian, who serves as the Chief Economist with Allianz,
Mohammad El-Erian, who serves as the Chief Economist with Allianz, recently opined that while cryptocurrencies will make it past the bearish gloom they have known this year, they are unlikely to substitute fiat currencies in the near future. Many have often debated if people would buy groceries with cryptocurrencies someday and it seems the answer is a resounding “no” from this economist. While he does believe that crypto as an asset class is here to stay, and will enjoy a greater degree of adoption,they will never overtake fiat in dominance or adoption. Erian made these comments while speaking at a New York conference called the Consensus:Invest Conference. He said:
“Cryptocurrencies will exist. They will become more and more widespread, but they will be part of an ecosystem. They will not be dominant, as some of the early adopters believed them to be.”
El-Erian is of the view that the fundamental reason why cryptocurrencies such as Bitcoin are not in a position to substitute fiat currencies is because they do not always qualify the criteria for being currency. Rather than being definitive forms of money, cryptocurrencies are commodities representative of a certain value. He emphasized on the fact that crypto currencies lack the innate features essential for something to be termed “money”.
This opinion of his echoes his longtime views on crypto as he had made similar comments back in September as well. Even though the market was going through a downer then too, he had been optimistic about the crypto market’s resilience. He believes that the present situation is a result of a cycle of over-production that followed the over-consumption of Bitcoin and other crypto coins during the bull market of end-2017. His opinion is also shared by other experts like Barry Silbert and Tim Draper, although the latter believes crypto will reolace fiat/political currency.