This Nobel laureate does not think crypto and bitcoin (BTC) have any value

After the earthquake caused by the collapse of the UST, a ” stable currency 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 reconsiders that crypto has no fundamental value.

What is cryptography?

Paul Krugman believes that cryptocurrencies are very special forms of digital assets. The main difference is based on the redefining the concept of ownership† If you have $1,000 in a bank account, you own it because the law says so, and the bank respects this legal claim by requiring me to be the owner. The state that has the police monopoly is therefore the ultimate arbiter that makes the system work.

Conversely, ownership of a crypto asset is established by the block necklace that is a ledger that records all transactions within a network of users. In the context of BTC, the protocol not only removes banks from the equation, but especially the state.

BTC, a bad refuge from inflation?

Paul Krugman starts by comparing the evolution of the consumer price index, which measures the evolution of an average package of goods and services in dollars and in BTC. In dollars, prices rose on average by 4% over the past six months. In bitcoin, more than 120%so representing annualized price inflation of 380%.

The Nobel Prize therefore confirms that: BTC is not (yet?) a good asset to protect against inflation. One can hardly refute his conclusion, at least in the West.

Crypto, especially marketing?

Originally, BTC attracted a clique of libertarians who were fascinated by protocol technology, but gradually the bull markets attracted new investors, motivated by quick profits. Celebrities and influencers actively contributed to this entry from newcomers: Elon Musk, Matt Damon, Mike Tyson or Kim Kardashian

Political figures like Mayor of New York, Eric Adams True Republican Senate candidate Josh Mandel all praised the BTC. The latter even plans to turn Ohio into a state pro-God, pro-family, pro Bitcoin Krugman regrets that even the poorest are most influenced by these celebrities. And thus lose money.

Dylan LeClair 🟠on Twitter:

Different investors

Paul Krugman notes that crypto investors are very different from stock market investorss. These would usually be white and would have had a university education. Conversely, citing 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. Yet he recognizes utility on the black market by more or less anonymous crypto† Cryptos would therefore not play no role in economic transactions and their price would currently be based only on speculation and FOMO fear of missing out

Bitcoin, according to Paul Krugman, would not need additional time to develop. He believes that it’s all old technology, as old as the iPad and who did not know how to convert the test. The inability to easily pay for groceries in BTC would prove this failure. Would the introduction to El Salvador also be one? failure Cook due to low usage.

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Crypto Crash, the New Subprimes?

Paul Krugman draws a parallel between the subprime crisis and the crypto market. The risks of cryptos would weigh disproportionately on the misinformed people. It is however crypto is unlikely to escalate into an economic crisis generally because of the small size of the ecosystem compared to the financial sector.

He compares the influence of celebrities like Musk with that of influencers who encouraged subprime mortgages† At the time, it was all about democratizing owner access to working class minority groups.

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

Source 1The New York TimesThe New York Times

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Yanis A

Bitcoin changes everything! Coming from a financial background, everything fascinates me in this technology. Every day I try to enrich my knowledge of this revolution that will enable humanity to progress in its conquest of freedom.

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