Cryptocurrency industry figures are reacting with scorn after US economist Paul Krugman likened Bitcoin to “setting the monetary system back 300 years.”
Bitcoin Is No Evolution, Suggests Krugman
In an opinion piece for the New York Times July 31, Krugman took aim at the high cost of Bitcoin mining and the “speculatory” nature of its users, claiming it undermined stability compared to fiat currency.
“…You’re supposed to be sure that a Bitcoin is real without knowing who issued it, so you need the digital equivalent of biting a gold coin to be sure it’s the real deal, and the costs of producing something that satisfies that test have to be high enough to discourage fraud,” he argued.
In other words, cryptocurrency enthusiasts are effectively celebrating the use of cutting-edge technology to set the monetary system back 300 years.
Krugman is the latest well-known economist to approach cryptocurrency with suspicion, with others such as Robert Shiller making repeated attempts to discredit Bitcoin in particular.
Most recently, Shiller forecast that Bitcoin would last only one hundred years due to the ability to hard fork, its very existence will be a “matter of dispute.”
Prominent educator Andreas Antonopoulos had previously addressed the hard fork theory, saying any Bitcoin derivative would have to surmount scaling challenges, which Bitcoin is already doing in order to succeed.
Szabo: Krugman ‘Worships’ Central Banks
Krugman too met with a wave of criticism, with veteran cryptographer Nick Szabo calling him out as a victim of the fiat money system.
“Evolution is something that happens in a very decentralized and parallel way; the central banking Krugman worships has been the opposite of that,” he wrote on Twitter.
Evolution is something that happens in a very decentralized and parallel way; the central banking Krugman worships has been the opposite of that.
— Nick Szabo (@NickSzabo4) August 1, 2018
Krugman had added that he considered both governments and central banks to be trustworthy with money issuance.
“Banknotes worked because people knew something about the banks that issued them, and these banks had an incentive to preserve their reputation,” he wrote.
Governments have occasionally abused the privilege of creating fiat money, but for the most part governments and central banks exercise restraint, again because they care about their reputations.
Others such as Max Keiser rebuked other parts of Krugman’s discourse.
Krugman justifies large denomination fiat’s use by drug lords because it “tethers” value to the smaller denomination notes used by non-drug lords. This is his rhetorical gymnastics attempt to ignore fact that less than 1% of illicit activity uses crypto. https://t.co/V15832B5K1
— Max Keiser (@maxkeiser) July 31, 2018
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