Several years ago, I ran a hedge fund on Wall Street. With a long pause for philanthropic and government work, I finally found my way to blockchain, and now, I spend my days writing about decentralized finance versus centralized finance. Some of my old Wall Street friends still run a lot of money in hedge funds, and back in 2018, they used to tease me and ask if I was still “doing my crypto thing.” Even today, some of them still think that bitcoin (B T c) is a Ponzi scheme. One of my dearest friends from my past days in finance recently sent me an opinion column on bitcoin in the New York Times by Nobel laureate and economist Paul Krugman, which further strong The logic of the fake world of crypto. Therefore, I accepted the challenge of answering Paul’s claims.
It’s clear that Krugman doesn’t think much about cryptocurrencies. This was clear in 2013 with his opening piece in the New York Times, Title “Bitcoin is Evil” (I’m sure he hasn’t been low this whole time).
But really, I can see where that’s coming from, and to be honest, I can think of many aspects in which cryptocurrencies need improvement. Having said that, repeating the old tired clichés like “Bitcoin is only good for illegal activities” or “Bitcoin has no real use in real life” doesn’t cut it any more in 2021. Respectfully, I would say that I was expecting more from a Nobel laureate in economics.
Krugman begins by comparing bitcoin’s so-called lack of progress during the past 12 years – since its inception – with other technologies, such as Venmo, the iPad or Zoom that have thrived and become a major part of our lives. Huh.
Well, let’s start by examining the public performance of bitcoin. What started out as ultra-niche software (sorry, Satoshi), Evolved into a $1 trillion asset class (at its peak) as the graph below shows – faster than any other asset – and has become one of the hottest research topics among major central and commercial banks as well as tech companies around the world. Not to mention, it has become the subject of several United States Senate (and other parliamentary) hearings concerning its regulation and economic impact.
Even more interestingly, Krugman completely ignores the fact that this progress has been made despite repeated attempts by many governments to fight bitcoin and cryptocurrencies.
In my opinion, the flexibility of a government’s sovereignty can be measured in two major factors: its national security and its economy. What could be a better metric of economic resilience than currency? In the past, Krugman Claimed That “Fiat Money” […] supported by men with guns,” which may explain why in this article he ignores the fact that most governments see cryptocurrencies as a direct threat to their currency, and as a result, they try to counter them. Some try to ban crypto, while others avoid establishing a clear regulatory framework. Only this can explain the reason why cryptocurrencies still haven’t become a part of our everyday lives.
Some use cases of blockchain technology
Krugman goes on with the weak argument that he has never heard a clear answer to the simple question: What is cryptocurrency and/or blockchain good for?
First, I am perplexed by this oxymoron because cryptocurrency is the use case of the blockchain, and also because Satoshi gave a very clear answer to this question in 2008: Bitcoin is here to replace central bank fiat money. I am sure Krugman has had a chance to discuss this with the most knowledgeable, intelligent blockchain and crypto experts.
I will admit that other use cases for blockchain (besides finance) are not easy to come by, and it may be that he was not convinced by the potential that the full transparency and inclusion provided by blockchain could be better on the supply chain. is. management, financial and aid fund control, fighting corruption through clean public procurement platforms, ending elite occupation, fight The spread of derogatory imagery of minors, and more. Still, I can’t understand how Krugman can ignore the impact of cryptocurrencies on people living in crumbling economies, such as Venezuela, or their potential to save billions of dollars in migrant remittance fees.
Instead, Krugman suggested that cryptocurrencies may be the most current Ponzi schemes, including “technobabble” and “libertarian derp,” while adding in the same breath that gold is, too. In fact, Krugman sees both as similar: “Gold, after all, suffers from the same problems as bitcoin.” In many circles, bitcoin is referred to as “digital gold”. Funnily enough, I can’t think of a better supporting argument that crypto believers could have hoped for other than Krugman’s quote. He later glorified gold’s “mystical” and “quasi-holy status”, claiming that cryptocurrencies may never reach it. Maybe he is right; However, he does not explain how he reached this interesting conclusion. In short, this argument is equivalent to knowing the fact that chocolate ice cream tastes better than vanilla.
Bitcoin and Illegal Activities
Last but not least, I want to address the repeated argument of Krugman and others that bitcoin is closely associated with illegal activities, and whose conditioning for the Pavlovian cryptocurrency summons ransomware, drug trafficking, and money laundering. .
Yes, bitcoin and other cryptocurrencies have been and still are being used by bad actors to finance their illegal activities. But by the way, there are also cash, gold and bank accounts. In another piece, I explain How exactly is bitcoin better than legal tender at helping law enforcement stop illegal financial activities?
Allow me to go out on a limb and say: Most owners or users of cryptocurrencies are not criminals. They are law-abiding citizens, wherever they are in the world. It is the lack of clear rules that exacerbates the issues. The lack of regulation not only fails to block all the legal loopholes that bad actors exploit, but it also prevents most users from having clear guidance on what they can and cannot do, thus giving everyone access. Put in the same bucket as the alleged criminals. In my opinion, the regulators should react fast and regulate the crypto markets as soon as possible. Some work hard to reach that goal, but most of them don’t do enough.
While Krugman and I hold different views on bitcoin, blockchain, and their value to the world, we agree on one thing: they are here to stay. The more these topics are discussed and shared, regardless of differing opinions, the more people become aware of the matter, learn about it and form their own independent opinions.
This is how concepts develop. In fact, the fact that such a highly regarded Nobel Prize recipient and economist has written an opinion column about bitcoin in one of the world’s most popular newspapers – twice already – has the effect of cryptocurrencies on our lives. The impact is, and can be, on our future. There is reason enough for us to be true believers, the potential impact and good that this technology can create in the future.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
The views, opinions and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
netta corin Orbs and Hexa are co-founders of the Foundation. Prior to Orbs, Netta served as Senior Advisor to General Mordechai Hod on Special Projects at the Israeli Ministry of Defense, and as Senior Advisor to Michael Oren, Deputy Minister of Diplomacy in the Prime Minister’s Office. Netta began her career as an investment banker on Wall Street, and later became a hedge fund manager. He has extensive philanthropy experience, and for more than 15 years he has served on several boards in Israel and the US, holding high-level positions on executive committees.