Question A:
A bitcoin's value derives from the belief that others will want to use it, which implies that its purchasing power is likely to fluctuate over time to a degree that will limit its usefulness.
Responses
Responses weighted by each expert's confidence
Question B:
A substantial source of the value of unbacked decentralized private cryptocurrencies, such as Bitcoin, arises from their convenience for use in illegal activities.
Responses
Responses weighted by each expert's confidence
Question C:
A properly diversified portfolio should include crypto assets.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
 John Campbell |
Harvard | Bio/Vote History | ||
|
|
||||
 John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
|
Its value is liquidity, like unbacked money. Positive price, no dividend. That means eventually it must earn zero expected return, and likely decline in value once "liquidity" (anonymity!) substitutes emerge. Volatility? Fiat money can have low volatility and low return.
|
||||
 Francesca Cornelli |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
|
|
||||
 Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
|
These fluctuations and the costs of transacting will prevent bitcoin from being much of a means of payment.
|
||||
 Wenxin Du |
HBS | Bio/Vote History | ||
|
|
||||
 Darrell Duffie |
Stanford | Bio/Vote History | ||
|
|
||||
 Janice Eberly |
Northwestern Kellogg | Bio/Vote History | ||
|
|
||||
 Eugene Fama |
Chicago Booth | Bio/Vote History | ||
|
High volatility is already a fact of life for bitcoin.
|
||||
 Xavier Gabaix |
Harvard | Bio/Vote History | ||
|
|
||||
 Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
 John Graham |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
|
|
||||
 Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
|
Bitcoin is about five times more volatile than gold. Currently, it is a risky store of value which is different from the founder's vision of a payments mechanism. High volatility was originally blamed on illiquidity. However, even with more liquidity - it is still very volatile.
|
||||
 Harrison Hong |
Columbia | Bio/Vote History | ||
|
|
||||
 Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
|
|
||||
 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
|
Bitcoin does depend on the beliefs of others. However, those beliefs can persist for a long time. Wampum -- made from shells of little value -- was the currency in New York for almost 100 years.
|
||||
 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
|
It is already trading like a speculative asset and no reason why that will cease.
|
||||
 Ralph Koijen |
Chicago Booth | Bio/Vote History | ||
|
|
||||
 Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
|
|
||||
 Andrew Lo |
MIT Sloan | Bio/Vote History | ||
|
It's obvious that, without any useful physical asset underlying bitcoin or any utility associated with it, it's value is derived strictly from the interest that buyers have in acquiring them.
|
||||
 Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
|
|
||||
 Sydney Ludvigson |
NYU | Bio/Vote History | ||
|
|
||||
 Matteo Maggiori |
Stanford GSB | Bio/Vote History | ||
|
|
||||
 Gregor Matvos |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
|
|
||||
 Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
|
|
||||
 Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
|
|
||||
 Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
|
Bitcoin's value derives both from speculation/gambling, like a meme stock, and from the expectation of future demand for it in transactions. But fluctuations in value will undermine the second use because there is no supply mechanism (like the Fed) to stabilize its value.
-see background information here |
||||
 Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
|
As a non-dividend paying asset, the primary source of value is resale. Other experiments such as lightning are a potential source of use value,
|
||||
 Thomas Philippon |
NYU Stern | Bio/Vote History | ||
|
|
||||
 Manju Puri |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
|
|
||||
 Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
 Paola Sapienza |
Northwestern Kellogg | Bio/Vote History | ||
|
|
||||
 Amit Seru |
Stanford GSB | Bio/Vote History | ||
|
|
||||
 Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
 Laura Starks |
UT Austin McCombs | Bio/Vote History | ||
|
|
||||
 Jeremy Stein |
Harvard | Bio/Vote History | ||
|
|
||||
 Johannes Stroebel |
NYU Stern | Bio/Vote History | ||
|
|
||||
 Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
|
|
||||
 Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
|
No intrinsic value, actually uses valuable energy resources, value could be disrupted by quantum computing
|
||||
 Toni Whited |
UMich Ross School | Bio/Vote History | ||
|
|
||||
Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
|
John Campbell |
Harvard | Bio/Vote History | ||
|
|
||||
|
John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
|
Bitcoin is not very efficient for legal transactions. Not all "illegal" is bad. Do we want to enforce China, Venezuela currency controls? Enforce every single US law? (Starve the undocumented?) Lose all anonymity in transactions? Crypto needs an enlightened and difficult balance.
|
||||
|
Francesca Cornelli |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
|
|
||||
|
Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Wenxin Du |
HBS | Bio/Vote History | ||
|
|
||||
|
Darrell Duffie |
Stanford | Bio/Vote History | ||
|
Yes, this a "substantial" part of the value, but probably not the major part of the value.
|
||||
|
Janice Eberly |
Northwestern Kellogg | Bio/Vote History | ||
|
Being outside the regulated payments network is most valuable for entities that want to avoid scrutiny. This creates demand, there are multiple such payment cryptos, so it need not dampen volatility.
|
||||
|
Eugene Fama |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Xavier Gabaix |
Harvard | Bio/Vote History | ||
|
|
||||
|
Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
|
John Graham |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
|
|
||||
|
Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
|
The centralized stablecoin tether is widely used. Tether is essentially an unregulated bank. Tether has more daily trading volume than BTC+ETH - most for trading, however, a portion for illegal transactions. BTC and monero are used for ransomware.
-see background information here |
||||
|
Harrison Hong |
Columbia | Bio/Vote History | ||
|
|
||||
|
Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
|
|
||||
|
Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
|
See also Eric Budish's fantastic primer on the issues with Bitcoin specifically
-see background information here |
||||
|
Ralph Koijen |
Chicago Booth | Bio/Vote History | ||
|
Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
|
|
||||
|
Andrew Lo |
MIT Sloan | Bio/Vote History | ||
|
Empirical evidence
|
||||
|
Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
|
Increased oversight of Bitcoin has decreased the extent to which Bitcoin is used for illegal activity. Illegal activity is more of an issue in smaller cryptocurrencies.
|
||||
|
Sydney Ludvigson |
NYU | Bio/Vote History | ||
|
|
||||
|
Matteo Maggiori |
Stanford GSB | Bio/Vote History | ||
|
I have not seen detailed studies of how much value arises from this feature
|
||||
|
Gregor Matvos |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
|
|
||||
|
Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
|
It is not clear how much illegal activity uses this form of payment so it is hard to know whether this is a significant part of its value.
|
||||
|
Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
|
Bitcoin and cryptocurrencies are the means of payment for ransoms, much cybercrime, and a lot of gains are never reported to tax authorities.
|
||||
|
Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
|
Eth value partially derives from being a platform token. The pseudo-anonymous nature of most chains means illegal transactions can be tracked.
|
||||
|
Thomas Philippon |
NYU Stern | Bio/Vote History | ||
|
|
||||
|
Manju Puri |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
|
|
||||
|
Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
|
Paola Sapienza |
Northwestern Kellogg | Bio/Vote History | ||
|
|
||||
|
Amit Seru |
Stanford GSB | Bio/Vote History | ||
|
|
||||
|
Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
|
Laura Starks |
UT Austin McCombs | Bio/Vote History | ||
|
|
||||
|
Jeremy Stein |
Harvard | Bio/Vote History | ||
|
|
||||
|
Johannes Stroebel |
NYU Stern | Bio/Vote History | ||
|
|
||||
|
Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
|
|
||||
|
Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
|
Best use case is illicit transactions: weapons, drugs, online scams
|
||||
|
Toni Whited |
UMich Ross School | Bio/Vote History | ||
|
|
||||
Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
|
John Campbell |
Harvard | Bio/Vote History | ||
|
|
||||
|
John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
|
Unbacked crypto only has value for "liquidity" or convenience yield reasons. Long run legal investors have no need for that. Otherwise, pure zero-sum speculation. Invest if you're smarter than average. And half are deluded.
|
||||
|
Francesca Cornelli |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
|
|
||||
|
Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Wenxin Du |
HBS | Bio/Vote History | ||
|
|
||||
|
Darrell Duffie |
Stanford | Bio/Vote History | ||
|
|
||||
|
Janice Eberly |
Northwestern Kellogg | Bio/Vote History | ||
|
An underlying claim to payment service provision could be a portfolio asset, but a bet just adds noise. Actual crypto service provision is likely negligible in a global market portfolio.
|
||||
|
Eugene Fama |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Xavier Gabaix |
Harvard | Bio/Vote History | ||
|
The weight on crypto, if not 0, should probably be negative, which leads to a huge downside risk.
|
||||
|
Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
|
John Graham |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
|
|
||||
|
Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
|
The token complex is approximately $2 trillion and hard to ignore any more. ETFs make it easy to invest. There are hundreds of companies in this space that would qualify - but almost all are private and only available to accredited investors.
-see background information here |
||||
|
Harrison Hong |
Columbia | Bio/Vote History | ||
|
|
||||
|
Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
|
|
||||
|
Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Ralph Koijen |
Chicago Booth | Bio/Vote History | ||
|
the allocation can be very small depending on one's beliefs about the long-run valuation of crypto currencies (and your confidence in those views)
|
||||
|
Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
|
|
||||
|
Andrew Lo |
MIT Sloan | Bio/Vote History | ||
|
Due to the volatility of all crypto assets, they are not useful "stores of value"
|
||||
|
Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
|
Crypto "can" be part of a well-diversified portfolio, but I don't think it necessarily "should" be. It is not clear what the source of value is for crypto
|
||||
|
Sydney Ludvigson |
NYU | Bio/Vote History | ||
|
|
||||
|
Matteo Maggiori |
Stanford GSB | Bio/Vote History | ||
|
The market portfolio clearly includes these assets, since they exists and are traded
|
||||
|
Gregor Matvos |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
|
|
||||
|
Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
|
Agree, but would be very small.
|
||||
|
Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
|
If crypto has transaction benefits, the expected return will be low due to convenience yield, making it unsuitable for a long-term investor's portfolio; if crypto is like a commodity, there does not seem to be a good economic rationale to expect a positive risk premium.
|
||||
|
Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
|
Mainly disagree: Currencies are for transactions, so the return on money-like assets is dominated by other assets (and selling them is profitable!). But there is an argument for holding 0.2%ish of portfolio in coins like "socks" whose payoff is their future transaction value.
|
||||
|
Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
|
|
||||
|
Thomas Philippon |
NYU Stern | Bio/Vote History | ||
|
|
||||
|
Manju Puri |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
|
|
||||
|
Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
|
Paola Sapienza |
Northwestern Kellogg | Bio/Vote History | ||
|
|
||||
|
Amit Seru |
Stanford GSB | Bio/Vote History | ||
|
|
||||
|
Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
|
|
||||
|
Laura Starks |
UT Austin McCombs | Bio/Vote History | ||
|
|
||||
|
Jeremy Stein |
Harvard | Bio/Vote History | ||
|
|
||||
|
Johannes Stroebel |
NYU Stern | Bio/Vote History | ||
|
|
||||
|
Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
|
|
||||
|
Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
|
Too volatile, non-trivial chance of large negative return, BUT low correlation with other asset classes
|
||||
|
Toni Whited |
UMich Ross School | Bio/Vote History | ||
|
|
||||
