In a New York Times Opinion piece, that was published on July 31, Nobel Prize winner economist Paul Krugman expressed his scepticism about the values of cryptocurrencies.
Crypto too volatile for Krugman
With his recent opinion piece, Krugman has joined the long list of financial experts and businessmen to criticize cryptocurrencies. Earlier, Warren Buffet has been one of the most public critics of cryptocurrencies.
Krugman noted the high transaction costs and an “absence of tethering” associated with cryptocurrencies and explained his position as a “crypto sceptic”. Krugman explained how the history of money has been slowly going far away from silver and gold coins to now, credit cards and other “digital methods”. He further asked,
“Why would you want to do that? What problem does it solve? I have yet to see a clear answer to that question.”
He said that cryptocurrencies’ “total collapse is a real possibility”, considering crypto’s total lack of tethering. He further added,
“If speculators were to have a collective moment of doubt, suddenly fearing that Bitcoins were worthless, well, Bitcoins would become worthless.”
Bitcoin for black market
He said that in the future, there might be a “potential equilibrium”. In that case, out of all the cryptocurrencies, only Bitcoin would survive. However, it will survive for use in “black market transactions and tax evasion”. He said, the actual reality, is “disappointment will probably collapse the whole thing”. Concluding his report, he further said,
“But if you want to argue that I’m wrong, please answer the question, what problem does cryptocurrency solve? Don’t just try to shout down the sceptics with a mixture of technobabble and libertarian derp.”