Nobel Prize-winning economist Paul Krugman has warned of the possibility of an eternal winter for blockchain projects, especially cryptocurrencies. In a recent article published in the New York Times (NYT), the economist criticizes blockchain as a technology and its use, citing several signs that he believes indicate that winter is coming.
Paul Krugman compares the cryptocurrency winter to Fimbulwinter.
Paul Krugman, Nobel laureate, warns of a coming eternal winter for blockchain-based projects, including bitcoin and other cryptocurrency networks. In a December 1 NYT article, the economist discusses the technology’s real utility and the signs that already point to its future downfall.
Krugman criticizes the real usefulness of this technology when there are other centralized alternatives that currently work very well. On this point, Krugman explained his skepticism by stating:
What’s the point? Why bother and spend money on maintaining a ledger in many places and essentially migrating that ledger every time a transaction occurs?
Based on this, as well as the recent fall of one of the world’s largest cryptocurrency exchanges FTX, Paul Krugman believes that this crypto winter could lead to a complete abandonment of blockchain and crypto technology. He compares it to Fimbulwinter, the winter that precedes the end of the world according to Norse mythology.
signs of autumn
For Paul Krugman, there have been several signs of impending rejection in recent months. The Economist cites in justification the recent delisting that several companies such as Maersk and the Australian Stock Exchange have done regarding their blockchain-based projects.
In addition, Paul Krugman is an outspoken critic of Bitcoin’s raison d’être, saying that “banks rarely steal their clients’ assets, while crypto institutions are more easily tempted, and extreme inflation destroys the value of a currency, usually only when there is political chaos.”
In the same vein, Paul Krugman singles out Bitcoin’s Proof-of-Work (PoW) consensus, estimating the environmental damage it has caused in the tens of billions of dollars, with no apparent benefit other than the production of “worthless tokens.”
However, this opinion differs from the one he expressed on May 20, 2021. At the time, he said that while he doesn’t believe in the fundamentals of Bitcoin, he is confident that the market is “a cult that can go on indefinitely.” In June, he compared cryptocurrencies to the housing bubble and the subprime mortgage crisis, stating that “this is a house not built on sand, but on nothing at all.”