Earlier this year when Bitcoin became the centre of debate around the globe following an unprecedented rally, Nobel laureate Paul Krugman joined the list of crypto-pessimists and called it an ‘evil’ and asked what it was good for. Now months later, when Bitcoin seems to have lost its sheen and is seen as playing catch-up, Paul Krugman has written that cryptocurrencies have set the “monetary system back by 300 years”.
In a hard-hitting opinion in the New York Times titled ‘Transaction Costs and Tethers: Why I’m a Crypto Skeptic’, noted economist Paul Krugman said, “…Cryptocurrency enthusiasts are effectively celebrating the use of cutting-edge technology to set the monetary system back 300 years.”
“Banknotes worked because people knew something about the banks that issued them, and these banks had an incentive to preserve their reputation. Governments have occasionally abused the privilege of creating fiat money, but for the most part governments and central banks exercise restraint, again because they care about their reputations,” Paul Krugman wrote.
“But you’re supposed to be sure that a Bitcoin is real without knowing who issued it, so you need the digital equivalent of biting a gold coin to be sure it’s the real deal, and the costs of producing something that satisfies that test have to be high enough to discourage fraud,” he added.
Earlier this year, Paul Krugman had written in a blog saying that Bitcoin looks to have designed as “weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind”. Paul Krugman is not alone in not believing cryptocurrency as an alternative to the current central bank-backed currency mechanism.
Top economist Nouriel Roubini said: Pseudo crypto paradise is actually a medieval hellhole. JP Morgan CEO Jamie Dimon had called Bitcoin a ‘fraud’, which would blow up eventually. Bitcoin caused media frenzy last last year when it surged from $4000 to about $20,000 in just two months. However, the rally did not continue for long. Bitcoin tumbled to $6,000 about a month ago. Interestingly, the Bitcoin price is surging again but this time steadily.
