Paul Krugman Says This Is The Endless Crypto Winter

In an editorial article published in the New York Times on December 1, Nobel laureate Paul Krugman warned of an impending endless cryptocurrency winter for blockchain-based initiatives such as Bitcoin and other cryptocurrency networks.

Krugman explicitly opposes Bitcoin‘s raison d’être, claiming that banks seldom steal their clients’ assets, but crypto institutions are more readily tempted, and high inflation that destroys money’s value normally occurs only during political upheaval.

He criticizes Bitcoin’s proof-of-work (PoW) consensus, putting the environmental harm in the tens of billions of dollars, with no clear gain other than issuing worthless tokens.

With the recent demise of FTX, one of the world’s largest cryptocurrency exchanges, Krugman fears that this crypto winter may result in the entire abandonment of blockchain and crypto technology. He compared it to the Fimbulwinter, a winter that, according to Nordic legend, preceded the end of the world.

According to Krugman, there have been various signals of this abandoning in recent months. As part of its justification, the economist cites recent write-offs made by companies such as Maersk and the Australian Stock Exchange for their blockchain-based projects.

This viewpoint differs from the one he offered in May 2021. While he did not believe in the foundations of Bitcoin at the time, he was certain that the market was a cult that could survive indefinitely.

Paul Robin Krugman is an American economist, who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for The New York Times. In 2008, Krugman was the winner of the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.

The Prize Committee cited Krugman’s work explaining the patterns of international trade and the geographic distribution of economic activity, by examining the effects of economies of scale and of consumer preferences for diverse goods and services.

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