Steve H. Hanke, professor of applied economics at The Johns Hopkins University and a scholar at the libertarian Cato Institute, pointed to bitcoin's volatility and lack of security. He called it "the speculative asset of the century."
Hanke, who directs the Troubled Currencies Project for Johns Hopkins and Cato, views the virtual currency's popularity as more computer science than economic theory. He said supporters were "computer geek" dilettantes with little appreciation for the historical evolution of currency.
"The ignorance of money is phenomenal," Hanke said, adding that bitcoin's biggest champions are "Silicon Valley kind of guys. None of this crowd has a clue about money and banking."
Although he considers himself bullish on electronic money, Hanke thinks bitcoin is too volatile—and its open-source code too insecure—to function as a challenger to fiat currencies.
"The wave of the future is virtual currencies, but as a means of transaction" like PayPal, credit and debit cards, said Hanke, who argued that a stable currency must be linked to a physical commodity to ward off hyperinflation.
"Stability is everything when it comes to currency ... and bitcoin is very unstable, and very volatile."
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The U.S dollar is shrinking as a percentage of the world's currency supply, raising concerns that the greenback is about to see its long run as the world's premier denomination come to an end.
When compared to its peers, the dollar has drifted to a 15-year low, according to the International Monetary Fund, indicating that more countries are willing to use other currencies to do business.
While the American currency still reigns supreme -- it constitutes $3.72 trillion, or 62 percent, of the $6 trillion in allocated foreign exchange holdings by the world's central banks -- the Japanese yen, Swiss franc and what the IMF classifies as "other currencies" such as the Chinese yuan are gaining.
"Generally speaking, it is not believed by the vast majority that the American dollar will be overthrown," Dick Bove, vice president of equity research at Rafferty Capital Markets, said in a note. "But it will be, and this defrocking may occur in as short a period as five to 10 years."
Bove uses several metrics to make his point, focusing on the dollar as a percentage of total world money supply.That total has plunged from nearly 90 percent in 1952 to closer to 15 percent now. He also notes that the Chinese yuan, the yen and the euro each have a greater share of that total.