The chairman of Roubini Macro Associates also took apart some of the arguments put forward by blockchain proponents. He said because blockchains require all transactions to be verified cryptographically, they are often slower than traditional processes.
Roubini also said the item’s unlikely of which blockchain technology would certainly be able to eliminate financial intermediaries, as many have claimed. Advocates of the technology have said of which the decentralized nature of the way transactions are verified could wipe out people within the middle of the movement of money, something Roubini disagrees with.
“This particular will be absurd for a simple reason: Every financial contract in existence today can either be modified or deliberately breached by the participating parties. Automating away these possibilities with rigid ‘trustless’ terms will be commercially non-viable, not least because the item would certainly require all financial agreements to be cash collateralized at 100 percent, which will be insane coming from a cost-of-capital perspective,” Roubini said.
“Moreover, the item turns out of which many likely appropriate applications of blockchain in finance — such as in securitization or supply-chain monitoring — will require intermediaries after all, because there will inevitably be circumstances where unforeseen contingencies arise, demanding the exercise of discretion.”
Roubini said of which Ethereum will be “vulnerable to manipulation by influential insiders” in addition to Ripple’s technology won’t replace the current system coming from cross-border money transfers between financial institutions called SWIFT.