This Nobel laureate believes that crypto and bitcoin (BTC) have no value

Following the earthquake caused by the collapse of UST, a ” stablecoin based on a Ponzi scheme, several economists commented on the crash. One of them, Paul Krugman, Nobel laureate in economics, does not spare his critique of the ecosystem and considers once again that crypto has no fundamental value.

What is Crypto?

Paul Krugman believes that cryptocurrencies are very special forms of digital assets. The biggest difference is based on redefining the concept of ownership. When you have 1,000 euros in a bank account, you own it because the law says so, and the bank respects this legal requirement by requiring me to be the owner. The state that has the police monopoly is therefore the final judge who allows the system to work.

Conversely, the ownership of a cryptoactive is established by block chain which is a public ledger that records all transactions within a network of users. In the case of BTC, the protocol not only removes banks from the equation, but especially the state.

BTC, a bad refuge from inflation?

Paul Krugman begins by comparing the development of the consumer price index, which measures the development of an average basket of goods and services in dollars and in BTC. In dollars, prices rose on average 4% over the last six months. In bitcoin, more than 120%thus represent annual price inflation of 380%.

That is why the Nobel Prize confirms it BTC is (yet?) Not a good asset to protect against inflation. One can hardly refute his conclusion, at least in the West.

Crypto, especially marketing?

Initially, BTC attracted a clique of libertarians fascinated by protocol technology, and then gradually bull markets attracted new investors motivated by rapid profits. Celebrities and influencers has actively contributed to this approach of new participants: Elon Musk, Matt Damon, Mike Tyson or Kim Kardashian.

Politicians like New York Mayor Eric Adams Where Republican Senate candidate Josh Mandel all praised BTC. The latter even intends to turn Ohio into a state pro-God, pro-family, pro-Bitcoin “. Krugman finds it unfortunate that the poorest are also most likely to be affected by these celebrities. And therefore lose money.

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Different investors

Paul Krugman notes that crypto investors are very different from stock market investorss. These would be most white and would have followed a university course. Conversely, with reference to a NORC study, 44% of crypto investors would not be white and 55% would not have a university degree.

No core values?

The Nobel laureate sees no fundamental difference between cryptocurrencies and payment systems such as Venmo or PayPal. He acknowledges anyway utility in the black market through more or less anonymous crypto. Cryptos would therefore not play no role in financial transactions and their price will currently only be based on speculation and FOMO (fear of missing out).

Bitcoin would not need additional time to develop, according to Paul Krugman. He assesses that it is already old technology, as old as The iPad and who did not know how to convert the test. Inability to easily pay for groceries in BTC would prove this failure. Would its introduction to El Salvador also be one failure prickly due to low utilization.

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Crypto-crashes, the new subprimes?

Paul Krugman draws a parallel between the subprime crisis and the crypto market. Risks associated with cryptocurrencies will weigh disproportionately much misinformed people. That’s it though crypto is unlikely to escalate into economic crisis overall due to the small size of the ecosystem relative to the financial industry.

He compares the influence of celebrities like Musk to the influence of influencers who encouraged subprime mortgages. Back then, it was about democratizing the access of the owner to minority groups to the working class.

Nobel laureate Paul Krugman is not his first critique of crypto and bitcoin (BTC). The UST crash only reinforces his vision: Crypto has no fundamental value, it is bad for the environment, and the poor will be the first victims. It is good to remember that this economist said in 1998 that the Internet would have no more impact on the world than fax …

Source 1 : New York Times ; New York Times

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Yanis A

Bitcoin changes everything! I come from a financial background and am passionate about everything about this technology. Every day I try to enrich my knowledge of this revolution, which will allow humanity to move forward in its conquest of freedom.

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