Nobel Prize winner Paul Krugman has labeled bitcoin and other cryptocurrencies as useless, inefficient, and basically worthless. He has also described crypto as primarily a tool for criminals, and mostly a Ponzi scheme.
Paul Krugman has repeatedly trashed bitcoin and other cryptocurrencies, dismissing them as useless, wasteful, niche, and only valuable due to hype and speculation. Over the years, the Nobel Prize-winning economist and New York Times columnist has called out the crypto industry for enabling criminals, complicating transactions, preying on vulnerable people, and operating as a pyramid scheme.
Commenting on crypto, Paul Krugman wrote on July 31, 2018: “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”.
He further wrote, “Cryptocurrencies 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”.
In an article titled ‘Why I’m a Crypto skeptic’, Paul Krugman wrote: “There might be a potential equilibrium in which bitcoin (although probably not other cryptocurrencies) remain in use mainly for black market transactions and tax evasion, but that equilibrium, if it exists, would be hard to get to from here: once the dream of a blockchained future dies, the disappointment will probably collapse the whole thing”.
In January 27, 2022 he wrote: “Crypto has been effectively marketed: It manages both to seem futuristic and to appeal to old-style goldbug fears that the government will inflate away your savings, and huge past gains have drawn in investors worried about missing out. So crypto has become a large asset class even though nobody can clearly explain what legitimate purpose it’s for”.
He further wrote, “I’m seeing uncomfortable parallels with the subprime crisis of the 2000s. No, crypto doesn’t threaten the financial system — the numbers aren’t big enough to do that. But there’s growing evidence that the risks of crypto are falling disproportionately on people who don’t know what they are getting into and are poorly positioned to handle the downside”.
On July 11, 2022, Krugman wrote: “The way I see it, crypto evolved into a sort of postmodern pyramid scheme. The industry lured investors in with a combination of technobabble and libertarian derp; it used some of that cash flow to buy the illusion of respectability, which brought in even more investors. And for a while, even as the risks multiplied, it became, in effect, too big to regulate”.
Meanwhile, people are commenting on social media on crypto corporations. Here are few of those comments:
Dr Emil Schaffhausen: If the price of a particular stock rises, it’s probably because of some good news – sales increased, a new product is to be released, profits increased. The price often decreases on bad news – profits drop, products fail.
When you own a share of stock, you actually own something – a small piece of a company. If that company one day says “We’re going out of business”, all of its assets will be sold, and shareholders will be entitled to a share of the proceeds (even of just pennies). If its debts exceed its assets, then the shareholders get nothing.
The price of a painting may reach very high levels. Why? Because someone wants if badly enough to pay the price. If it’s discovered to be a fake, then it’s probably worth nothing.
In America, currency was backed by actual, physical gold, then by silver. It is no longer backed by those precious metals, but instead by the country as a whole. We have faith the country will remain solvent. Should the country go under, then the currency would likely become worthless. But at least unless and until that happens, it remains fairly stable.
But what about bitcoin. What does the holder actually have. What backs it? Why does the price of bitcoin and other digital currency rise and fall? The owner of a bitcoin really has nothing – no backing, no promises, nothing physical. Nothing. It truly is a Ponzi scheme.
Joan: If you haven’t gotten involved in crypto, don’t. If you have crypto, sell immediately. That’s what I think.
Richard: You don’t need a Nobel Prize to figure this out. Bitcoin is computer calculated money with no material backing.
Joey: It’s phony money. If you want to ascribe value to it, be my guest but in reality it’s worthless. At least with Danish tulips people got a flower.
Dennis: I always thought Crypto was a ripe opportunity for crooks and scam artists. I will never go there.
Alfred: Hmm, Crypto, Ponzi scheme, pyramid scheme, the only people who will be making money from this will be the ones at the very top, everyone else will be left out in the cold to speak.
Marc: Crypto has no intrinsic value. In a nutshell here is why: Anyone (you, me or a cleaver 12-year-old) can buy the “mining” software and create a new cyber coin right now, today and start operations. The trick is to pump (market) it to crypto investors and get them to pay cash for it where it is held in a account they call a “wallet”. And if the coin pumping scheme doesn’t attract new investors and the company runs out of cash and goes under it becomes what they call “dead coin” and the wallets are gone when the computer is turned off.
Larry: I remember the junk bond market, Lincoln Savings and Loan, this is the same fate pending.
Tom: The man is right! It has no value unless someone is willing to buy nothing. This was better than the telemarked scams in the 90’s. Sell something that doesn’t exist, same thing just a new scam.
