Finance Professor Predicts Bitcoin Will Emerge as Digital Gold

In addition to the media's perpetual fascination with the prospect of a Bitcoin bubble, message boards and Reddit threads are packed with similar conversations about the efficacy and sustainability of digital currencies.

This week, Noah Smith, an assistant professor of finance at Stony Brook University and an op-ed contributor at Bloomberg, crafted a compelling forecast for Bitcoin's future.

To be sure, each scenario has its share of supporters after analyzing the exchange rate of Bitcoin and the dollar's inflation rate, Mr. Smith concluded that Bitcoin as Gold is the most likely scenario for the digital currency.

Bitcoin is an asset with a high expected return, and these assets tend to be more volatile.

Bitcoin is well-known for its wild, and certainly more frequent, price swings.

Mr. Smith contends, Bitcoin is unlikely to go away.

Bitcoin futures are already available at CME, Cboe, and Goldman Sachs, and rumors of an impending Bitcoin ETF are picking up steam.

"So my prediction is that Bitcoin will stick around, experiencing repeated bubbles and busts, but slowly gaining in value. That is why I personally still own some Bitcoin."

Despite its similarities to gold, Mr. Smith contends that Bitcoin could still be a bust.

Mr. Budish's academic paper, "The Economic Limits of Bitcoin and the Blockchain," notes that Bitcoin will need to become significantly more valuable than to become a viable, secure financial asset in the future.