The Myopia of Nobel Laureate Wisdom

Eugene Fama, often hailed as the father of the Efficient Market Hypothesis, has now joined the ever-growing parade of economists confidently dismissing Bitcoin with arguments that feel like they were drafted on a typewriter in the 1970s. Outdated? Absolutely. Entertainingly misguided? Even better.

Fama emerged in an era when severing money from gold was considered the peak of financial enlightenment, and fiat currency was the shiny new toy in the economist’s playpen.

Yet, despite this "progress," Fama has always been skeptical of central banks' ability to manage economies effectively. He doesn’t wave the fiat flag as fervently as some of his colleagues but remains oddly blind to the very market forces that have propelled Bitcoin forward — forces that, ironically, align with his own Efficient Market Hypothesis.

Fama’s EMH claims that markets price in all available information efficiently. If that were true, Bitcoin should have vanished into the abyss years ago, right? And yet, here we are, watching it grow stronger, more adopted, and more entrenched in global finance. If anything, Bitcoin’s survival is an undeniable validation of his own theory — a reality he conveniently ignores.

Let’s look at his claims!

"Cryptocurrencies are such a puzzle because they violate all the rules of a medium of exchange."

Oh, do they now? And who exactly wrote these "rules", some economic cabal? Bitcoin settles hundreds of billions of dollars in transactions every year, outpacing the GDP of some small nations. It is used for remittances, cross-border payments, and as a hedge against collapsing economies.

Sounds like a pretty solid medium of exchange.

The real puzzle here is why free markets should care about academic rulebooks that fail to predict, explain, or even acknowledge financial innovations until they prove them dead wrong.

Conflating Bitcoin with "Cryptocurrencies"

Fama’s take on Bitcoin lumps it in with the whole crypto zoo, as if Bitcoin were just another meme token fighting for attention. This is like equating gold bars to arcade tokens — technically similar but fundamentally worlds apart.

Bitcoin operates on a foundation of mathematical certainty, decentralization, and absolute scarcity — a framework that no centralized cryptocurrency, no matter how cleverly marketed, can replicate.

That Fama fails to differentiate between Bitcoin and the vast ocean of pump-and-dump altcoins is either an oversight or an unwillingness to engage with reality. Either way it massively diminishes the weight of his opinions.

"[Cryptocurrencies] don’t have a stable real value. That kind of medium of exchange is not supposed to survive."

Fiat currencies have lost over 90% of their purchasing power in a century, and yet we are supposed to believe they embody "stable real value"? Meanwhile, Bitcoin, despite its volatility, has appreciated millions of percent since its inception.

If Bitcoin isn’t supposed to survive, then what should we call the dollar, which requires infinite government intervention just to maintain an illusion of stability?

Volatility is just a feature of price discovery, and as Bitcoin adoption grows, its volatility diminishes. By contrast, fiat is only "stable" because its decline is pre-programmed into central bank policies.

"Unlike fiat currencies, which are backed by governments and central banks, Bitcoin is entirely dependent on market demand. If demand disappears, its price will collapse to zero."

Wait — does Fama think fiat isn’t also dependent on demand? Because last time we checked, demand for fiat is maintained through coercion: legal tender laws, tax obligations, and the subtle promise that if you don’t accept it, bad things will happen.

Bitcoin, on the other hand, is backed by something revolutionary: mathematical certainty, decentralization, and absolute scarcity. It does not require threats or legal mandates to be valuable — people choose to hold it. And guess what? Demand is increasing, not disappearing.

"Bitcoin lacks intrinsic value."

Here we go again with the "intrinsic value" nonsense. Nothing has intrinsic value. Value is subjective and situation dependent. Gold is valuable because humans agree it is. Stocks are valuable because of anticipated future earnings. Bitcoin is valuable because it provides financial sovereignty, censorship resistance, and portability unmatched by any other asset.

Unlike fiat, Bitcoin is not backed by empty promises and political whims. It is pure monetary innovation, and dismissing it as valueless is like dismissing the internet in the 1990s because it lacked a centralized authority.

"Bitcoin is close to crashing to zero."

Bitcoin has been pronounced dead more times than we can count — literally, over 400 times in financial media. Yet here we are, watching Bitcoin thrive while fiat currencies scramble to maintain credibility.

If Bitcoin were going to zero, it would have happened already. Instead, institutional adoption is growing, regulatory clarity is improving, and nations are integrating it into their economies. Meanwhile, fiat currencies are propped up by infinite debt, bailouts, and artificial liquidity injections — which of the two is actually on life support?

"I’m hoping it will bust, because if it doesn’t, you have to start all over with monetary theory."

A moment of honesty — finally. If Bitcoin forces economists to rethink monetary theory, that proves the old models were fundamentally broken. In science, when reality contradicts a theory, we discard the theory — not reality. If Bitcoin’s success means rewriting the textbooks, then the textbooks should be rewritten, not dismissed.

Fama’s statement reveals what this really is: an ideological battle. He doesn’t want Bitcoin to succeed because it forces academia to admit its shortcomings. But economic theories do not dictate reality — markets do. And the market has spoken.

Conclusion

Eugene Fama, like many of his academic peers, is stuck defending an economic framework that is rapidly crumbling. The fiat experiment he championed has produced runaway debt, growing financial repression, and increasingly unstable monetary policies.

Bitcoin is not an anomaly; It is the free market's response to fiat failure.

His critiques are not just wrong — they are desperately clinging to a vanishing paradigm. If his own Efficient Market Hypothesis holds any weight, Bitcoin’s success is definitive proof that the market has spoken, loud and clear. And Fama’s theories, like the fiat money he still defends, are becoming relics of the past.

Bitcoin isn’t just financial innovation — it is financial revolution. And revolutions don’t ask for permission.