Today at the Consensus Invest conference in New York,
Allianz chief economist Mohamed El-Erian spoke about blockchain and cryptocurrencies, and the challenges of self-disruption. He believes that cryptocurrencies initially overstepped their claim as money and their nature is more akin to commodities.
El-Erian grouped the early cryptocurrency adopters into three segments. The first group he referred to as the fundamentalists who adopted cryptocurrencies out of principle because there is no central authority such as a central bank. The second group is the pragmatists who recognize that the technology can be adapted for different uses. And the third group are the speculators. He said the importance of the three groups would vary over time.
Talking about the entire blockchain and cryptocurrency sector, El-Erian thinks of it as a capital structure. The senior part is blockchain technology. “That is going to spread that’s going to be more stable, and that is a major, major change,” he said. He thinks of the technology as the equivalent of Senior Bonds in the investment world. Going down a bit in the capital structure you’d get cryptocurrencies. And at the bottom, you get the highly volatile and risky ICOs.
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