- Krugman questions the technology’s usefulness when other centralized options exist.
- The Nobel prize laureate criticized Bitcoin’s proof-of-work (PoW) consensus.
The Nobel prize laureate Paul Krugman is warning that blockchain-based projects, such as Bitcoin and other cryptocurrency networks, will soon enter an unending cryptocurrency winter. A column written by an economist and published in the New York Times on December 1st explains the technology’s true value and the warning signals that point to its eventual demise. Krugman questions the technology’s usefulness when other centralized options already exist and perform well.
“What’s the point?” Why go to the trouble and expense of maintaining a ledger in many places, and basically carrying that ledger around every time a transaction takes place?”
Warning Indications of Abandoning
Based on this and the recent collapse of FTX, one of the largest cryptocurrency exchanges in the world. Krugman fears that this “crypto winter” might lead to the full abandonment of blockchain and crypto technology. The Fimbulwinter, the last winter before the end of the world in Nordic mythology, was the comparison he made.
The recent several months, according to Krugman, have shown many warning indications of this abandoning. The recent write-offs of blockchain-based initiatives by major corporations like Maersk and the Australian Stock Exchange are cited as evidence of this by the economist. Krugman is openly critical of Bitcoin’s motivations.
The economist stated:
“banks rarely steal their customers’ assets, while crypto institutions more easily succumb to the temptation, and extreme inflation that destroys money’s value generally happens only amid political chaos.”
Also in this vein, Krugman criticizes Bitcoin’s proof-of-work (PoW) consensus, claiming that it has caused tens of billions of dollars’ worth of environmental harm for no obvious reason other than the creation of “worthless tokens.”
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