Robert Hockett

Professor of Law

Robert Hockett is professor of law at Cornell University and an expert in financial and monetary law and economics. He says Bitcoin may experience a short-term comeback driven by the halving, but that the COVID-19 pandemic will spur on new digital fiat currencies that will sound the “death knell” of Bitcoin.

Hockett says:

“Investors now driving up Bitcoin prices fall into two categories - 'smart money' and not-so-smart 'herd money.' 

“Smart money investors see two reasons to buy now: first, the next imminent Bitcoin 'halving,' since previous halvings all have brought price drops that then more than recover; and second, an imminent 'crowd-in' of herd money – money invested by faddists and hype-followers. Herd money investors see the usual specious reasons for crowding in. Cryptopians routinely tout Bitcoin as 'stable' in crises, as governments spend in responding to crisis and thereby spark nonsense doom talk about 'fiat money inflation.' 

“There is great irony in this motive this time around. For one thing, investors always flock to 'safe assets' in times of crisis, and the safest of safe assets has long been the dollar-denominated U.S. Treasury security. For another thing – and this one's a new development – the present crisis has fiscal and monetary authorities everywhere, including here, looking to adopt digital fiat currencies. And once these are online the death knell of Bitcoin and all 'wildcat' crypto will sound – just as it did when the new federal 'Greenback' drove out all wildcat banknotes from the 1860s on down.” 

Will Cong

Associate Professor of Finance

Will Cong is professor of finance at the Cornell SC Johnson College of Business and an expert on financial technology, innovation and entrepreneurship. He says any long-term success of Bitcoin will be determined by more than the upcoming halving.

Cong says:

“Overall, the halving and pandemic could play a role in a Bitcoin comeback by reducing inflation and enhancing decentralized cryptocurrency as store of value, but only to a limited extent. There are several other factors that can drive cryptocurrency prices, and which cannot be ignored when speculating on Bitcoin’s future.

“For example, will Bitcoin as a network or platform experience fundamental changes to its functionality and productivity? So far there is no change to the consensus protocol except the incentive provision for mining which should not be altered much due to money neutrality. We also do not see greater third-party contributions or innovations on the Bitcoin network, unlike platforms such as Etherem that actively develop smart contracting and third-party apps. 

“Second, has the valuation gone up because more people start to use (not just speculate) bitcoins for transactions? Network effect from usage does not seem there. Arguably Bitcoin could become a better store of value or investable asset due to its decentralized nature (a centralized company or government may be crippled by the pandemic and lose credibility). However, ‘pandemic’ means global, so even a decentralized system could not escape it. Portfolio re-balancing can't fully explain the comeback.

“Third, we have to think about token-supply. Deflationary measures (burning, reduction in supply or minting) can help boosting price, but the halving was anticipated all along and there is no additional resolution of uncertainty about the token-supply policy. Under rational expectations, there should not be a price jump.

“Fourth, could social distancing fuel people's gambling or speculation appetite, or maybe the attention on ideology of decentralization and financial democratization? This could be. For Bitcoin, without much fundamentals to speak of, behavioral factors may be an important driver for price changes.” 

Emin Gün Sirer

Associate Professor of Computer Science

Emin Gün Sirer is professor of computer science at Cornell University, co-director of Cornell’s Initiative for Cryptocurrencies and Contracts (IC3), and founder and CEO of AVA, and open source platform for launching highly decentralized applications, financial primitives and interoperable blockchains. Gün Sirer says halvings have taken too much of the attention and resources within the cryptocurrency ecosystem.

Gün Sirer says: 

"It's easy to get caught up in the halving as an engine for speculation and profit if you're on the right side of those wagers, but it's unfortunately become a black hole consuming far too much of our ecosystem's attention, discussion, and resources.

"Just outside the frame of the halving is massive progress and pockets of true innovation across the ecosystem toward networks that carry Satoshi's vision forward into the next generation of blockchain technology.

"Crypto prices to be the least interesting development in our ecosystem. Many of us, including my team at AVA, are here to build the infrastructure that will empower programmable capital and usher in a new era of finance defined by velocity, efficiency, and innovation in new products and services available to people around the world."