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."