Cryptocurrency has been subject to many doubts since its birth, including many professional scholars and experts in related fields Now the Nobel laureate Paul Krugman has joined the growing list of pessimists
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Krugman was awarded the Nobel Prize in economic science in 2008 for his pioneering work in linking trade patterns with geography and globalization. He sees the current cryptocurrency world as the next 2008 financial crisis, which caused investors to lose more than $1 trillion.
Written by him and recently published in the New York Times, Krugman used "big short" to describe the cryptocurrency industry as a big scam. He added that, in particular, the cryptocurrency "house" represented by the stable currency was not built on the sand, but completely built on the air. It was a castle in the air.
A key argument put forward by the American economist is that although the market value reaches trillions of dollars, these encrypted assets have no practical effect when it comes to daily business transactions. Krugman also questioned how cryptocurrency could make transactions easier than fiat money and the existing online banking system? The answer he observed was "empty words lacking typical cases".
Krugman cited the housing foam as an example. The foam was growing, and only a few people could really see through the uncontrolled growth and prepare for collapse. The cryptocurrency world is going through a similar phase to some extent. In just six months, the cryptocurrency world lost more than a trillion dollars in value. Bitcoin is a dazzling star in the cryptocurrency economy. The current transaction price is about $30000 per coin, less than half of the peak set in 2021.
But Krugman is not just warning about the turmoil of cryptocurrencies. The Nobel Prize winner also pointed out how cryptocurrency has become the favorite of criminals trying to launder money. Despite the existence of exchanges and the whole content of traceable design around blockchain, cyber criminals have escaped hundreds of millions of dollars of assets by using the disgraceful mixer service.
However, Krugman is not the only one who compares cryptocurrency to a foam. In an interaction with CNBC last year, David Rosenberg, President, chief economist and strategist of Rosenberg research, praised bitcoin as one of the largest foam, and further added that no one could predict when it would burst. When this topic was raised in 2018, Warren Buffett told CNBC that he was sure that cryptocurrency would come to a bad end.