Paul Krugman is an economist who is notorious for having a massive problem with Bitcoin. He’s never been a fan of the cryptocurrency, and many people just can’t seem to figure out why. Even in 2018, he commented on Bitcoin about not being significant for investors and not achieving a meaningful investment opportunity status in the market. However, Bitcoin has seen a massive rise since 2018, and even then, it was a part of an intellectual rebellion to decentralize investments. Why Krugman doesn’t see Bitcoin as meaningful is not clear.
His stance towards Bitcoin today
Even today, Krugman feels that Bitcoin is just a phase that will pass. It’s important to note, however, that Krugman isn’t against all cryptocurrencies and decentralized finance in general. According to him, Bitcoin lacks primarily in two aspects that make it a not so ideal choice for investment. These two aspects are transaction costs and tethers.
Due to its already established nature in the crypto world, Bitcoin does have massive transaction costs. Thus, anyone who is looking to invest small amounts of money will probably not be able to reap Bitcoin profits today. That’s a valid point, but people can still invest small amounts and wait for massive price increases, which is not uncommon with Bitcoin.
By tethers, Krugman means the credibility of Bitcoin and crypto in general. According to him, these currencies are not backed by any government and thus, are nothing more than a bubble. Moreover, he also feels that there is no practical value of cryptos such as Bitcoin due to their intangible nature.
Yet, his views on crypto are being considered outdated by an increasing number of investment experts.