Bitcoin is Taking Us Back 300 Years in Economic History – Nobel Economist Paul Krugman

Paul Krugman, a prominent American economist and Nobel Prize winner, has lashed out on the bitcoin once again. This time, he said that bitcoin represents 300 years of economic regression, wiping away the evolution of money into frictionless transactions using debit and credit cards.

Krugman writes regularly as a columnist for the New York Times. It is in his column that he lambasted bitcoin.

He wrote:

“Set against this history [of money], the enthusiasm for cryptocurrencies seems very odd, because it goes exactly in the opposite of the long-run trend. […] In other words, cryptocurrency enthusiasts are effectively celebrating the use of cutting-edge technology to set the monetary system back 300 years. Why would you want to do that? What problem does it solve? I have yet to see a clear answer to that question.”

He continued:

“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.”

His uncomplimentary words towards bitcoin were centered on its transaction (and mining) costs, and its nature which He claims allows bitcoin to be used for illegal purposes.

He hailed currency-issuing Central banks for doing a good job of providing fiat currencies with stable purchasing power but said bitcoin is not useful as a medium of exchange or a store of value.

In the past, Krugman has been critical of bitcoin and cryptocurrency and infamously likened it the long “cryptocon”.

Despite skepticism from some notable mainstream economist and financial professionals like Krugman, Jamie Dimon of JP Morgan, and Former IMF Chief Economist, Kenneth Rogroff, bitcoin and cryptocurrency drawing the attraction institutional investors. The latest is a growing interest in Bitcoin Exchange-Traded Funds (bitcoin ETFs).

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