Steve Hanke’s Critique Reignites Debate Over Bitcoin’s Fundamental Worth
The dramatic rise of Bitcoin to record-breaking highs has been met with a growing wave of skepticism, as renowned economist Steve Hanke delivers one of the most stinging critiques yet of corporate Bitcoin reserve strategies. Amidst market euphoria, Hanke has forcefully reiterated his long-standing position: Bitcoin, despite its surging price, is intrinsically worthless.
On July 14, Hanke, a professor of applied economics at Johns Hopkins University and a former economic adviser to multiple governments, took to social media platform X to deliver a stark warning. He denounced the emerging trend of companies holding Bitcoin and Ethereum as part of their reserves, equating the practice to gambling:
“Companies swapping productive investments for Bitcoin reserves are playing roulette. Bitcoin and Ethereum reserves have no business model because BTC has no intrinsic value.”
This blunt assessment has reignited tensions between traditional economists and crypto advocates. Hanke’s position echoes the criticism made just days earlier by Peter Schiff, a well-known economist and gold proponent. Schiff stated on July 10:
“The rationale behind Bitcoin or Ethereum reserve companies is to exploit dumb investors willing to pay higher prices for shares in companies with no real business model. The problem is that the fools trying to exploit other fools are fools themselves.”
Hanke publicly endorsed Schiff’s view, stating, “He’s exactly right,” and further cementing his position among leading critics of crypto-based financial strategies.
A Pattern of Skepticism: Bitcoin as ‘Fool’s Gold’
Hanke’s recent comments are part of a larger pattern of skepticism he has maintained for years. He has frequently dismissed Bitcoin as speculative hype, unworthy of being classified as a legitimate asset. In earlier statements from March, he described Bitcoin as “fool’s gold” and warned of its “zero fundamental value,” asserting that no sound financial system should be built upon such a fragile foundation.
He has also targeted the broader crypto lending ecosystem, suggesting that the foundation upon which crypto-backed loans stand is fundamentally unsound:
“Eventually, no one will lend based on crypto collateral. But for now, some foolish lenders will do just that.”
Such remarks challenge the credibility and long-term viability of the decentralized finance (DeFi) movement and cast doubt on the wisdom of financial institutions entering the crypto space.
Supporters Fire Back: Bitcoin as Sovereign Hedge and Financial Innovation
While critics like Hanke and Schiff continue to sound alarms, the crypto community and corporate adopters offer a starkly different perspective. Bitcoin proponents argue that the digital asset offers unique advantages over traditional financial instruments. They cite its decentralized nature, transparency through blockchain technology, limited supply, and increasing institutional adoption as clear indicators of its potential to function as a sovereign store of value and hedge against inflation.
MicroStrategy, Tesla, and other high-profile companies that have allocated substantial portions of their reserves to Bitcoin maintain that such moves are strategic, not speculative. For these firms, Bitcoin offers a safeguard against fiat currency debasement and aligns with forward-thinking digital finance models.
A Growing Ideological Divide
The rift between traditional economists and digital asset advocates continues to deepen as Bitcoin’s role in the financial world evolves. For many in academia, Bitcoin’s volatility and lack of traditional valuation metrics render it fundamentally flawed. But for those in the crypto and tech sectors, it represents the future of decentralized wealth management and financial autonomy.
Steve Hanke’s scathing rebuke underscores the tension between these two paradigms. As Bitcoin’s price continues to climb, so does the intensity of the debate over whether its value is based on legitimate innovation or speculative illusion.
In the end, the market will decide. But for now, the battle lines are clear: in one corner, skeptics like Hanke warn of a house of cards built on hype; in the other, visionaries see the foundation of a new financial era.
Conclusion: A Reckoning Looms?
Steve Hanke’s “no intrinsic value” assertion is not new—but its timing, amid a crypto bull run, adds fuel to the ongoing war of ideologies. Whether Bitcoin proves to be the fool’s gold Hanke claims, or the digital gold its supporters believe, remains one of the most compelling economic debates of our time.
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