Nobel Prize-winning economist Paul Krugman has warned of the possibility of a perennial winter for blockchain projects, including crypto. In a recent article published in the New York Times (NYT), the economist criticizes blockchain as a technology and its uses citing several signs that he believes point to this coming winter.
Paul Krugman compares Crypto Winter to Fimbulwinter
Nobel laureate Paul Krugman warns of an upcoming eternal cryptocurrency winter for blockchain-based projects, including Bitcoin and other cryptocurrency networks. In an NYT opinion piece published Dec. 1, the economist discusses the real utility of this technology and how there are already signs that predict a future downfall.
Krugman criticizes the real usefulness of this technology when there are other centralized alternatives that currently work quite well. On this subject, Krugman explained his skepticism by stating:
What’s the point?” Why go through the trouble and expense of keeping a ledger in many places, and essentially carrying it around every time a transaction takes place?
Based on this, as well as the recent fall of one of the world’s largest cryptocurrency exchanges, FTX, Krugman believes this crypto winter could lead to a complete abandonment of blockchain and crypto technology. He compared it to the Fimbulwinter, a winter that precedes the end of the world according to Norse mythology.
Signs of the fall
For Krugman, over the past few months there have been several signs of this abandonment to come. The Economist cites the recent delisting several companies like Maersk and the Australian Stock Exchange made of their blockchain-based projects as part of his rationale.
Furthermore, Krugman is openly critical of Bitcoin’s raison d’être, stating that “banks rarely steal their customers’ assets, while crypto institutions more easily succumb to temptation, and extreme inflation destroys the value of the currency. money usually only happens in the midst of political chaos”.
Along the same lines, Krugman calls Bitcoin’s proof-of-work (PoW) consensus, estimating the environmental damage it has caused in the tens of billions of dollars, with no apparent benefit outside of the production of “worthless tokens”.
However, this opinion is different from the one he expressed in May 2021. At the time, he said that while he did not believe in the fundamentals behind Bitcoin, he was sure the market was a “cult that can survive. indefinitely”. In June, he compared cryptocurrencies to the housing bubble and the subprime mortgage crisis, saying “it’s a house built not on sand, but on nothing at all.”
What do you think of Paul Krugman’s opinion on the future of blockchain and crypto? Tell us in the comments section below.
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