This Nobel Prize winner thinks that cryptocurrencies and bitcoin (BTC) are worthless

After the earthquake caused by the collapse of the MTS, a ” stable currency based on a Ponzi scheme, several economists commented on the incident. One of them, Paul Krugman, Nobel laureate in economics, does not spare the criticism of the ecosystem and once again considers that crypto has no fundamental value.

What are cryptocurrencies?

Paul Krugman believes cryptocurrencies are very special forms of digital assets. The main difference is based on the redefine the notion 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 claim by requiring you to be the owner. The state that holds the police monopoly is therefore the final arbiter that allows the system to operate.

Conversely, ownership of a crypto asset is established by the block chain which is a public 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 against inflation?

Paul Krugman begins by comparing the evolution of the consumer price index, which measures the evolution of an average basket of goods and services in dollars and in BTC. In dollars, prices have increased on average by 4% in the last six months. In bitcoin, more than 120%thus representing annualized price inflation of 380%.

The Nobel Prize therefore affirms it BTC is not (yet?) A good asset to hedge against inflation. His conclusion can hardly be refuted, at least in the West.

Cryptocurrencies, especially marketing?

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

Political figures like New York Mayor Eric Adams Where is it Republican Senate candidate Josh Mandel everyone 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 more likely to be influenced by these celebrities. And therefore lose money.

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Different investors

Paul Krugman notes that cryptocurrency investors they are very different from stock market investorsS. These would be mainly white and would take a university course. On the contrary, citing a NORC study, 44% of cryptocurrency investors would not be white and 55% would not have a college degree.

No core value?

The Nobel laureate sees no fundamental differences between cryptocurrencies and payment systems such as Venmo or PayPal. Nonetheless he acknowledges utility on the black market through more or less anonymous crypto. Cryptos would therefore not play no role in economic transactions and their price currently it would only be based on speculation and FOMO (fear of losing).

Bitcoin would not need additional time to develop, according to Paul Krugman. He considers it it’s already old technology, as old as the iPadand that he didn’t know how to convert the test. The inability to pay for BTC spending easily would demonstrate this failure. Its introduction in El Salvador would also be a failure pungent due to low usage.

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Crypto crash, the new subprime?

Paul Krugman draws a parallel between the subprime crisis and the cryptocurrency market. The risks associated with cryptocurrencies will weigh disproportionately on the misinformed people. It still is crypto is unlikely to turn into an economic crisis overall due to the small size of the ecosystem compared to the financial sector.

Compare the influence of celebrities like Musk to that of influencers they encouraged subprime mortgages. At that time, it was about democratizing access to property for minority groups in the working class.

Nobel laureate Paul Krugman is not his first cryptocurrency and bitcoin (BTC) critique. The FSO crash only reinforces his opinion: cryptocurrencies have no fundamental value, they are harmful to 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 no longer have an impact on the world of faxing …

Source 1 : The New York Times ; The 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 which will allow humanity to advance in its conquest of freedom.

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