Paul Krugmanwinner of the 2008 Nobel Prize in Economics, said in his most recent New York Times op-ed that Bitcoin and the entire cryptocurrency market, including blockchain technology, are on the verge of extinction.
Krugman, who is constantly critical of the cryptocurrenciesstates that the term “crypto winter”often used by the media to describe the current slump of digital currencies is inappropriate.
According to the economist, the current situation is comparable to “Fimbul Winter”an event in Norse mythology that precedes the end of the world.
In Norwegian history, the English term “Fimbulwinter” refers to a period of “three consecutive winters, without a summer break”, in which snow falls incessantly from all directions, and a series of uncountable wars rages across Europe.
For the Nobel Prize in Economics, therefore, the current crypto winter is just the beginning of what is to come for bitcoin and other cryptocurrencies, predicting the total extinction of digital assets in the coming years.
Many people say we are going through a “crypto winter”. But this may underestimate the matter. This is increasingly similar to Fimbulwinter – in this case not just cryptocurrencies, but the whole idea of organizing economic life around the famous “blockchain”. – writes Krugman.
Blockchain
Even blockchain did not escape criticism from the economist, who claimed that the technology underlying Bitcoin, turned out to be essentially useless.
According to him, people didn’t realize that many institutions started to abandon blockchain after they tried (and failed) to use it to solve real problems.
The economist recalled that maritime giant Maersk recently abandoned its corporate blockchain project, which is supposed to improve global trade.
He also cites an article by Tim Bray, who worked for Amazon, who claims that the company has given up developing its own blockchain because it found no use for it.
“There was an alternative, more humble reason for using blockchain technology, though not necessarily for cryptocurrencies: it was to provide a more secure, low-cost way to track transactions and other things in general. But that dream also seems to be dying. “
end of market
Next, the Nobel Prize in Economics talked about one of the main promises of cryptocurrencies, the fact that they don’t require a third party as a central point of trust, meaning you don’t depend on a third party to store or transfer assets: a bank , a person or an intermediary that may operate between you and your cryptocurrency transactions.
However, Krugman said recent market crashes have shown that crypto institutions “Easier to succumb to temptation” to steal their clients’ assets.
He used as an example FTX, the third largest cryptocurrency brokerage in the market, which used its clients’ assets to fund high-risk bets.
“Bitcoin’s original rationale was that it would remove the need for trust – you don’t have to worry about banks stealing your money or governments inflating its value. However, in reality, banks rarely steal their customers’ assets, while cryptocurrency companies more easily succumb to temptation, and extreme inflation that destroys the value of money usually only occurs in the midst of political chaos.
Finally, in sharing his article on Twitter, Krugman said he expected criticism from cryptocurrency fans, but provoked them by saying he is receiving less and less criticism.
“Maybe the market is already running out.”
Shocked by the comments here – I expected a lot more outrage from cryptobro. Maybe this era really is coming to an end https://t.co/wjEDv7JQ58
— Paul Krugman (@paulkrugman) December 2, 2022
Source: Live Coins
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
