• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Upcoming Events
    • TMRW, Dubai (February 8-10, 2023)
    • European Blockchain Convention, Barcelona (February 15-17, 2023)
    • Blockchain Fest, Singapore (February 16-17, 2023)
    • Blockchain Economy Summit, London (February 27-28, 2023)
    • Paris Blockchain Week (March 20-24, 2023)
    • GAIN Expo, Amsterdam (May 4-5, 2023)
    • Blockchain Expo North America, Santa Clara (May 17-18, 2023)
    • COMEX, Oman (May 22-25, 2023)
    • BLOCK3000: Blockchain Battle, Lisbon (July 6-7, 2023)
    • NFT Show Europe, Valencia (July 14-15, 2023)
    • TOKEN2049, Singapore (September 13-14, 2023)
    • Blockchain Expo Europe, Amsterdam (September 26-27, 2023)
    • Future Tech Event, Oman (November, 2023)
  • Past Events
    • Event Horizon
    • Blockchain Life
    • BlockShow Europe

Crypto Reporter

Online magazine about cryptocurrencies, NFTs, DeFi, GameFi and other blockchain technologies


Join us on Telegram: https://t.me/crypto_reporter
Visit Paris Blockchain Week on March 20-24, 2023
  • News
    • News Feed
    • Cryptocurrencies
      • Bitcoin
      • Altcoins
    • Payment solutions
    • Exchanges
      • Binance
      • bitFlyer
      • Bitfinex
      • CBOE
      • CME
      • Coinbase
      • Coincheck
      • Coinfloor
      • Nasdaq
      • Poloniex
    • Regulations
      • Australia
      • Belarus
      • China
      • Europe
      • India
      • Iran
      • Israel
      • Japan
      • North Korea
      • Philippines
      • Portugal
      • Russia
      • South Korea
      • Thailand
      • Turkey
      • Venezuela
      • Vietnam
      • United States
    • Blockchain platforms
    • Crypto news in brief
    • Stats & trends
    • Reviews
      • Ambrosus
      • ATN
      • Dash
      • Green Power Exchange
      • Power Ledger
      • ShapeShift
      • Waltonchain
      • Cryptocurrency market capitalization can top 4 trillion USD, under conservative estimates
    • Opinion
    • Sponsored
  • Press Releases

Nobel Prize winner Paul Krugman is skeptical about cryptocurrencies

August 2, 2018 By Crypto Reporter

Nobel Prize winning economist Paul Krugman expressed skepticism about the future of cryptocurrencies. He said that he has two main problems with bitcoin and other digital currencies: “transaction costs and absence of tethering.”

Explaining his position, Krugman noted that “cryptocurrency enthusiasts are effectively celebrating the use of cutting-edge technology to set the monetary system back 300 years.”

“First there were gold and silver coins, which were heavy, required lots of security, and consumed a lot of resources to produce. … Then came bank notes backed by fractional reserves. These were popular because they were much easier to deal with than bags of coins. They also reduced the need for physical precious metals. … Meanwhile, people gradually shifted away from cash transactions, first toward payments by check, then to credit and debit cards and other digital methods.”

“Set against this history, the enthusiasm for cryptocurrencies seems very odd, because it goes exactly in the opposite of the long-run trend. Instead of near-frictionless transactions, we have high costs of doing business, because transferring a Bitcoin or other cryptocurrency unit requires providing a complete history of past transactions. Instead of money created by the click of a mouse, we have money that must be mined — created through resource-intensive computations,” said Krugman.

Also, in Krugman’s opinion, the dollar is valuable because U.S. government “accepts dollars as payment of tax liabilities – liabilities it’s able to enforce because it’s a government. … But cryptocurrencies have no tether to reality, have no underlying value. The value of cryptocurrency is merely a bubble which will burst once people lose faith in it.”

“Cryptocurrencies, by contrast, have no backstop, no tether to reality. Their value depends entirely on self-fulfilling expectations — which means that total collapse is a real possibility. If speculators were to have a collective moment of doubt, suddenly fearing that Bitcoins were worthless, well, Bitcoins would become worthless,” explained Krugman.

He also mentioned that even gold and silver have real-world applications as they can be used for “for jewelry and for things like filling teeth, that provide a weak but real tether to the real economy.”

According to Krugman, tethering is one of cryptocurrency’s greatest weaknesses.

 

More news:

  • Mercado Libre to allow customers to buy, sell and store cryptocurrencies
    Mercado Libre to allow customers to buy, sell and store cryptocurrencies
    November 23, 2021
  • Croatia's top food retailer Konzum now accepts cryptocurrencies
    Croatia's top food retailer Konzum now accepts cryptocurrencies
    December 2, 2021
  • Former head of Argentina calls Ethereum one of the most valuable cryptocurrencies 
    Former head of Argentina calls Ethereum one of the most valuable cryptocurrencies 
    December 31, 2021
  • Coinme adds ETH, DOGE and other cryptocurrencies to Coinstar kiosks
    Coinme adds ETH, DOGE and other cryptocurrencies to Coinstar kiosks
    August 26, 2022

Filed Under: General News, News Tagged With: cryptocurrency, news, Paul Krugman

Primary Sidebar

Follow Us

Press Releases

London is going to host the largest crypto & blockchain conference

February 8, 2023

2023 Price Projections For Axie Infinity (AXS), Orbeon Protocol (ORBN), And Aptos (APT)

February 8, 2023

Banxa and MetaMask Partner to Make it Easier to Access Web3

February 7, 2023

Orbeon Protocol (ORBN) vs Fantom (FTM): Which Will Offer Better Returns?

February 7, 2023

Orbeon Protocol (ORBN) Continues Upward Trend, While Filecoin (FIL) and Zcash (ZEC) Struggle

February 7, 2023

TMRW

EBC 2023

Blockchain Fest Singapore 2023

Blockchain Economy London 2023

PBW 2023

GAIN Expo 2023

Blockchain Expo North America 2023

COMEX 2023

Blockchain Expo Europe 2023

Blockchain Expo Global 2023

Footer

Crypto Reporter is an online magazine about cryptocurrencies, NFTs, DeFi, GameFi and other blockchain technologies
About us
Contact us
Submit press-release

Search

2017-2023 Crypto Reporter