The famous American economist and a recipient of the Nobel Prize has recently spoken in the ChainXChange conference held in Las Vegas. The conference panel included numerous other prominent crypto personalities, such as Fundstrat co-founder and outspoken bitcoin bull Tom Lee as well chief marketing strategist of Ripple Cory Johnson.
Krugman’s previous critique of digital assets has been well documented, with the scientist recently claiming that “total collapse [of the crypto industry] is a real possibility“. Speaking on his New York Times Opinion piece, he has also added that bitcoin might survive as the sole virtual currency, which would be used for “black market transactions and tax evasion”.
Given such a negative sentiment beforehand, it is somewhat surprising that Mr. Krugman has chosen a much softer stance this time. Prior to the discussion, Krugman gave a presentation on the development of money and how it relates to the current state of the economy with an emerging digital asset class. The economist then admitted of not being an expert on the matter, saying that, “Bitcoin is the only one I halfway understand.“
Bitcoin has been often labeled as “digital gold” and Mr. Krugman was the latest to make such a comparison, as he likened mining the precious metal to a huge amount of energy required to extract virtual currencies. However, according to Krugman, “Gold is dead… Bitcoin has more utility than gold. There is some chance for Bitcoin to be valuable in the future.“
The major concern for the economist when comparing fiat currencies with BTC is the transaction cost. He claimed that “If transaction costs were reduced to reasonable amounts, that would remove my major opposition.“
Writing in the said NY Times column, he has argued that “Eight years after Bitcoin was launched, cryptocurrencies have made very few inroads into actual commerce. […] Cryptocurrencies have a large market valuation, but they’re overwhelmingly being held as a speculative play, not because they’re useful as mediums of exchange.
However, since Mr. Krugman has admitted he does not understand blockchain technology and is agnostic towards it, he is probably not aware of the increasing number of blockchain 3.0 initiatives. The scalability of the next generation blockchain will be significantly increased, in part due to reduced input costs and transactions. Therefore, the main obstacle for Mr. Krugman to approve of cryptocurrencies might soon be gone.
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.