Sheer investment legend has it that 99% of cryptos are a scam to be avoided

Cryptocurrencies don't have a bed of roses. Bitcoin has been growing for the past two days, but it is far from its long-term highs and many people and impatient investors are turning their backs on it. There are all sorts of causes. What is surprising, however, is that an absolute investment legend is turning his back on the crypto!

Nouriel Roubini is clearly not fond of crypto at the moment

And that legend is the famous Dr. DOOM. Economist Nouriel Roubini has been increasingly scathing about the beleaguered cryptocurrency industry, particularly FTX and its now disgraced founder Sam Bankman-Fried: The craziest 24 hours in cryptocurrency history? FTX crash crushes the entire cryptocurrency market

"FTX and Fried are not the exception - they're the rule," he said Wednesday in an interview on the sidelines of the World Economic Forum in Davos, Switzerland. The New York University professor, who is known by his symbolic nickname for his dire views on global trends. "Literally 99% of cryptocurrencies are a scam. Criminal activity. A total Ponzi scheme with a real bubble that will collapse."

Roubini has been a vocal critic of cryptocurrencies, calling most people in the industry fraudsters. FTX declared bankruptcy in late 2022, while its founder Sam Bankman Fried faces charges of securities fraud, securities fraud and conspiracy, all of which he has admitted to.

"You have to stay away from cryptocurrencies, you definitely have to stay away," Roubini said. "And most of these people literally belong in jail. Literally, they're all crooks."

And while Roubini compared the impact of the FTX crash to Bernie Madoff's Ponzi scheme, he noted that in the latter case, a few thousand people came to harm compared to the millions of people affected by the FTX crash.

"FTX alone had 1 million customers in the US," Roubini said. "There were 40 million people invested in cryptocurrencies, mostly young people or lower-income people or minorities, and none of them bought bitcoin for $1,000 or even $10,000. Most of them got FOMO in 2021, when it skyrocketed from $20,000 to $70,000, and 99% of them bought well above the current market value. And they lost everything."

His view on crypto is shared by the likes of Warren Buffett and Charlie Munger, who have not taken to cryptocurrencies. But many investors are at least sympathetic to the potential of blockchain. But even here Roubini is not positive. He has expressed similar scepticism about blockchain technology, arguing that "you basically can't create trust with technology alone" without verification by a trusted institution. It almost sounds like he doesn't understand the core principle and benefit of crypto at all.

Roubini added that the idea that decentralized technology can create trust is impossible because in reality you always need some trusted institution to validate the transaction. So most of what is actually called blockchain is blockchain in name only... so it's not a blockchain, it's a glorified database.

Well those are very interesting views. What do you think? Is the economist who was one of the first to sense the 2008 crash right? Or is he drastically wrong?

Disclaimer: This is in no way an investment recommendation. It is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.