You might have heard of the infamous “Bitcoin Is Evil” post. If not, then you should visit its link and read it. It is a real page-turner.
Now that you might have read it, the frustration that you could be feeling is similar to how the cryptocurrency community felt upon reading Paul Krugman’s most recent rage attack upon cryptocurrencies.
In what most people termed as “uncalled for”, Krugman, a popular economist, took advantage of the recently deployed 280 character limit by Twitter in a no holds barred approach towards what could very well be his favorite subject to drag down: cryptocurrencies.
The Krugma Twitter Stream
In a recent string of tweets this Sunday, January 21, Krugman started off with comparing Bitcoin to gold. His tweets and approach then went south not long after, where he started questioning the very utility of cryptocurrencies and alluded how the mode is only meant for transactions meant for criminals.
“Cryptocurrency lets you make electronic transactions; but so do bank accounts, debit cards, Paypal, Venmo etc. All these other methods involve trusting a third party; but unless you’re buying drugs, assassinations, etc. that’s not a big deal.” Krugman stated in one of the tweets.
He did not stop there and went on with further comments that, even for Krugman’s approach towards cryptocurrencies fell flat, which was a shame coming from an economist of his stature.
For instance, he questioned cryptocurrency by comparing it to fiat and gold, asking while fiat is “backed by governments” and gold is “actually useful for some things, like filling teeth and making pretty jewelry”, what drives the value of cryptocurrencies?
He then answered his own question by his own understanding, and stated that cryptocurrencies such as Bitcoin’s price is “driven purely by speculation — by what Robert Shiller calls a natural Ponzi scheme, in which early entrants make money only bc others buy in.”
As critical as Krugman is of cryptocurrencies, he is still a revered economist. That is why, when someone like him makes unknowledgeable comparisons only for the sake of slamming something that he does not personally like, is beyond the scope of comments.
Calling cryptocurrencies a Ponzi scheme is similar to calling a hedge-fund one, or for that purpose, even any other potential profit bearing asset that is not fiat.
However, Krugman did not stop with statements that and further questioned the usefulness of Blockchain technology, something that has been looked into and adopted by respected and blue chip corporations all over the world (you might have heard of IBM and Maersk’s worldwide deployment of blockchain recently).
“So the blockchain is interesting, but not yet clear whether it’s useful for anything. And investing in Bitcoin still looks a lot less reasonable than investing in cold fusion.”
Putting Krugman’s dislike of cryptocurrencies aside, no one can actually question the utility and technological advances of blockchain unless they are coming from a place of immense ignorance and distaste. It is akin to calling the Internet ‘sinful’ during the 90s.
Most people that are not into cryptocurrency, are at least, aware of blockchain technology and the potential it has to revolutionize aspects of the world. It has been adopted by business corporations, financial institutions, banks, governments, and even by non-profit organizations, primarily, due to the fact that is has significant potential across many industries.
Krugman might be a really good economist, but his judgment clearly gets clouded by his hostility for cryptocurrencies whenever he talks about them.
While we can respond to each of Krugman’s tweets with long paragraphs of our own, responding to his very last tweet with this link of IBM’s blockchain business division would suffice and let those in their right mind know that almost all of Krugman’s other comments were also based out of contempt than his actual analysis (which again, might not have as much substance as we’d have hoped for).