Panelists at Boston University staged a pointed exchange that framed crypto policy and investment as a trade‑off between two distinct risk narratives: one that treats cryptocurrencies as primarily speculative, dominated assets; the other that highlights practical utility in markets with weak institutions and broken fiat payment rails.

On the skeptical side, Larry Kotlikoff framed virtual monies as dominated assets — instruments that, by design, do not produce cash flows and are therefore valued mostly on speculative expectations. He likened retail exposure to a lottery ticket: the payout profile is highly asymmetric, with a small probability of outsized gains and a large probability of negligible or negative outcomes once fees, slippage and crashes are factored in. Kotlikoff’s comments, echoed by Professor Tarek Hassan, stressed the structural problems that magnify downside: extreme volatility, fragile liquidity during stress, regulatory tail risks, and the absence of intrinsic yield that anchors traditional asset valuations. The panel described the exchange as “great,” underscoring how consequential the juxtaposition of these views was for attendees.

Opposing that skepticism, Professor David Lagakos presented a use‑case driven view. For economies with high inflation, unreliable banks, or expensive cross‑border railways, crypto can function as a lower‑cost payments layer and an avenue for remittances. Lagakos pointed to tangible mechanics: faster settlement windows, bypassing inefficient correspondent banking, and the ability to preserve purchasing power when local currency rapidly deteriorates. He singled out Venezuela as an environment where dollar access is constrained and inflation erodes savings, making crypto pathways—despite their own frictions—comparatively attractive for routine transactions and sending remittances.

Where the debate becomes operationally useful is in mapping each claim to market mechanics. The dominated‑asset critique is grounded in classic valuation logic: absent coupons or dividends, an asset’s price must be supported by expected resale value — a fragile foundation when participation is sentiment‑driven and concentrated among short‑horizon traders. That structure exacerbates tail volatility and creates correlated sell pressure during regime shifts. On the other hand, the remittance argument hinges on on/off‑ramp quality, local liquidity, and regulatory acceptability: lower per‑transaction fees and faster settlement only benefit end users if they can reliably convert between crypto and local currency at reasonable spreads and without legal reprisals.

Practical risks and mitigants straddle both sides. For households in high‑inflation countries, stablecoins or crypto rails can lower transaction costs but introduce counterparty and convertibility risk; custodial solutions simplify use but centralize custodial risk; decentralized paths preserve self‑custody but impose technical burdens and user‑experience frictions. For portfolio allocators, Kotlikoff’s lottery analogy argues for severe position sizing or exclusion unless a clear return stream or hedge function exists.

The exchange sharpened two decision paths for market participants and policymakers: treat crypto primarily as speculative instruments to be tightly regulated and limited in retail portfolios, or acknowledge utility in targeted financial‑access applications and design tailored frameworks that reduce abuse while preserving useful payment functions.

Full remarks and contextual notes from Larry Kotlikoff are available as a source reference: https://larrykotlikoff.substack.com/p/the-great-boston-university-cryptocurrency