Nobel Prize-winning economist Paul Krugman has voiced his opinion regarding the future state of cryptocurrencies. The vocal critic has given a two-fold explanation indicating his skepticism regarding the concept of cryptocurrency. He states that despite cryptocurrency being a modern technology, has “set the monetary system back by 300 years”.
The renowned economist highlighted the transactions costs the concept of cryptocurrency carries. Krugman being Crypto Sceptic states, that this concept completely goes against the long-running trend which is continually moving towards ‘frictionless’ transactions. He voices his lack of conviction regarding the reliability of the concept of cryptocurrency.
He was quoted saying, “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.”
He asserted that cryptocurrency enthusiasts are celebrating the use of this concept by setting monetary system back 300 years. He asserts that instead of money created by the click of a mouse, we have money that must be mined, created through resource-intensive computations.
As stated by Moneycontrol, Krugman further argues that cryptocurrency, unlike fiat currency, does not hold any underlying value. He adds that it is merely a delusion and the bubble will break once people with lose faith in it. He believes that cryptocurrency has no credibility and is no closer to reality.
According to him, cryptocurrency value depends entirely on self-fulfilling expectations – which means the possibility of the concept of cryptocurrency collapsing is very high. He explains that if the investors would collectively get a doubt that Bitcoins were worthless, well, Bitcoins would become worthless. As of now, tethering is one of cryptocurrencies greatest weaknesses.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]