- Nobel Prize-winning economist Paul Krugman criticizes cryptocurrencies, calling them largely useless, overvalued, and appealing to bank skeptics and criminals.
- Krugman suggests that the introduction of a central bank digital currency (CBDC) could deflate the crypto bubble and expose the dark side of the crypto world.
Paul Krugman, a Nobel Prize-winning economist, has recently expressed his skepticism about cryptocurrencies, labeling them as largely useless, overvalued, and appealing primarily to bank skeptics and criminals. His comments come amidst a growing debate about the value and utility of digital assets like Bitcoin and other tokens.
In a Twitter thread, Krugman compared the disdain for central bank digital currencies (CBDCs) expressed by Ron DeSantis, Florida’s governor and a Republican presidential candidate, to Rick Santorum’s dislike of the National Weather Service. He pointed out that while private weather services provide a useful service, cryptocurrencies do not offer much in terms of utility.
In a New York Times op-ed published in April, Krugman offered a more detailed critique of the crypto industry. He argued that the demand for cryptocurrencies comes partly from people who, rightly or wrongly, distrust banks, and partly from those engaged in illicit activities.
Krugman questioned DeSantis’s opposition to the potential creation of a CBDC, suggesting that Americans who distrust banks might welcome a digital dollar issued by the US government. He believes that a CBDC could help deflate the crypto bubble and expose the dark side of the crypto world, as only wrongdoers would continue to use unofficial tokens.
DeSantis has expressed concerns that authorities might restrict what a CBDC is spent on and use it to infringe on Americans’ freedom. However, Krugman argues that rejecting a digital dollar would have a different outcome. He suggests that it would not protect the rights of Floridians to buy gas or guns, but rather, it would protect the ability of criminals to evade taxes, launder money, buy and sell illegal drugs, and engage in extortion.
Over the past decade, Krugman has repeatedly criticized cryptocurrencies. He has described them as wasteful, inefficient, unstable, pointless, worthless, and at risk of complete collapse. His views on cryptocurrencies offer a critical perspective on the ongoing debate about the future of digital currencies and their role in the global financial system.
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