Nobel Prize-winning economist Paul Krugman says he has given up predicting the imminent demise of bitcoin. The economist now suggests thinking of the cryptocurrency â€œas a cult that can survive indefinitely.â€ Nonetheless, Krugman still believes that bitcoin has no fundamentals.
Paul Krugman Likens Bitcoin to a Cult That Can Survive Indefinitely
Nobel laureate Paul Krugman said on Twitter last week that he has given up on predicting bitcoinâ€™s demise. Krugman won The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2008 â€œfor his analysis of trade patterns and location of economic activity,â€ The Nobel Prizeâ€™s website shows. The economist tweed last week:
Krugman is still not a fan of bitcoin, however, insisting that the cryptocurrency does not have any fundamentals to discuss.
â€œBTC isnâ€™t a new innovation; itâ€™s been around since 2009, and in all that time nobody seems to have found any good legal use for it,â€ Krugman opined. â€œItâ€™s not a convenient medium of exchange; itâ€™s not a stable store of value; itâ€™s definitely not a unit of account.â€
In an opinion piece published Thursday in The New York Times, Krugman compared the crypto craze to a Ponzi scheme. â€œTwelve years on, cryptocurrencies play almost no role in normal economic activity. Almost the only time we hear about them being used as a means of payment â€” as opposed to speculative trading â€” is in association with illegal activity, like money laundering or the bitcoin ransom Colonial Pipeline paid to hackers who shut it down,â€ Krugman described, adding:
â€œIts value rests on the perception that itâ€™s a technologically sophisticated way to protect yourself from the inevitable collapse of fiat money, which is coming one of these days, or maybe one of these centuries. Or, as I say, libertarian derp plus technobabble,â€ the economist also tweeted.
â€œThis may sound to you like a speculative bubble, or maybe a Ponzi scheme â€” and speculative bubbles are, in effect, natural Ponzi schemes,â€ Krugman continued. â€œBut could a Ponzi scheme really go on for this long? Actually, yes: Bernie Madoff ran his scam for almost two decades, and might have gone even longer if the financial crisis hadnâ€™t intervened â€¦ Now, a long-running Ponzi scheme requires a narrative â€” and the narrative is where crypto really excels.â€
Nonetheless, the Nobel Prize-winning economist concluded:
What do you think about Paul Krugmanâ€™s view on bitcoin and cryptocurrency? Let us know in the comments section below.
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