An American Economist and Nobel Prize-Winning Economist, Paul Krugman shared his opinion on crypto and said that the crypto could lead to an “endless winter,” as most of the digital tokens have lost their real-life value.
Crypto is An “Endless Winter”: Paul Krugman
The Opinion Columnist Mr. Krugman wrote for the New York Times, that just a year before Bitcoin and other cryptocurrencies were selling at record prices that valued around $3 Trillion. Since then the prices of crypto tokens have plunged, while major crypto institutions have collapsed amid allegations of scandal.
He wrote that “We are, many people say, going through a “crypto winter.” But that may understate the case. This is looking more and more like Fimbulwinter, the endless winter that, in Norse mythology, precedes the end of the crypto world, not just cryptocurrencies but the whole idea of organizing economic life around the famous “blockchain.”
He also questioned why many people including small investors, major financial and business players bought into the belief that this “bad idea” was the wave of the future. Over the concept of Blockchain and its working he added that “who bought if from whom and so on.”
Moreover, the asset could be a digital token like a Bitcoin, but also could be a stock or even a physical thing. He also wrote what’s distinctive about blockchains is as “the ledgers are supposed to be decentralized: They aren’t sitting on the computers of a single bank or other company; they’re in the public domain, sustained by protocols that induce many people to maintain records on many servers.”
He raised the question that “why go to the trouble and expense of maintaining a ledger in many places, and basically carrying that ledger around every time a transaction takes place?”
“I’m not sure how many people have noticed that the few institutions that seriously tried to make use of blockchains seem to be giving up,” he added.
Five years ago, when Australia’s Stock Exchange announced its plan to use a blockchain platform to clear and settle trade, it recently canceled its plan and noted the loss of $168 Million.
In addition, the shipping giant, Maersk also announced that it is quitting its plan to use a blockchain to manage supply chains.
Tim Bray, who worked for Amazon Web Services also shared the reason why Amazon chose not to implement a blockchain of its own: “It couldn’t get a straight answer to the question, “What useful thing does it do?”
On the other hand there is an old prediction about internet by Mr. Krugman gained attention in which he stated that “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/12/04/paul-krugman-talked-about-crypto-read-his-thoughts-here/