Why Paul Krugman, The Famous Economist, thinks Bitcoin is a Cult?

Alan Joseph Alan Joseph
Jun 28, 2021 4 min read
Why Paul Krugman, The Famous Economist, thinks Bitcoin is a Cult?

Bitcoins have been criticized by a lot of people from the beginning of the launch of the cryptocurrency. Many of the investors and economists believe that the coin is worthless and does not have any valuation and the increase in the price is mainly due to skepticism. Paul Krugman who is a Nobel Peace Prize winner for one of his works on global trade theory in 2008 is also a critic of cryptocurrency. In this article let’s look at why he claims the cryptocurrency to be a cult.

Paul Krugman – Latest News
Reason Why Paul Krugman thinks Bitcoin is a Cult
Other Major reasons Why he criticized the popular cryptocurrency, Bitcoin
What did Paul Krugman predicted about Bitcoin in 2018
FAQ

Paul Krugman – Latest News

Paul Krugman who is one of the prominent critics of digital coins and digital assets had posted a tweet on the microblogging platform predicting the downfall of the world’s most famous and one of the favourite Digital tokens, Bitcoin. He also described the digital token as a cult that cannot survive for an indefinite period.


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Reason Why Paul Krugman thinks Bitcoin is a Cult

Paul Krugman who is a Nobel Peace Prize award received economist and an author who contributes to the New York Times has publicly criticized the cryptocurrency, bitcoin. Even in the past, it was noted that the famous economist has described the digital asset bitcoin as an evil.

In the latest tweets that he posted on Twitter; Paul Krugman has conveyed that even though the coin has been present since the financial crisis of the last decade it had failed to build up its reputation as legal currency.

He also added that the cryptocurrency, bitcoin has a cult-like support base which would keep it going further. He also said on Twitter that he has stopped predicting what is going to happen to the crypto asset and added that all the time the digital currency would have a new set of believers. He also added the statement to think of the digital currency, bitcoin as a cult that would be able to survive indefinitely.


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Paul Krugman who is one of the world’s most credible economist has cited two major reasons behind the skepticism claimed by him. He has conveyed that the cryptocurrency, bitcoin has a lack of tethering and have high gas fees.

A certain article that was published by Paul Krugman in the past has argued that digital assets like cryptocurrency have a higher rate of transactional fees while compared to the traditional fiat currencies. He also argued that when compared to the financial assets that are backed by the Government of certain countries the cryptocurrencies or digital assets do not have a body that governs them or backs them or provide reinforcement.

He wrote in a column that instead of creating a smooth transaction the people have high costs of doing the business because transferring cryptocurrencies or bitcoins will require providing a complete history of the previous transactions.

He added that instead of creating money through a click of a mouse, the money must be created through mining that too using computations that are resource intensive.

What did Paul Krugman predicted about Bitcoin in 2018

In the year 2018, Paul Krugman had a view that there was a total possibility for a complete collapse of bitcoins due to an absence of a backstop. He had conveyed that the value of the cryptocurrency depended completely on self-fulfilling expectations and stated that the total collapse is completely possible.

He added that if the speculators have had a doubt or a collective moment on the value of the bitcoin and a sudden fear or a feeling that bitcoins are worthless, then bitcoins would become worthless according to his prediction.

Conclusion

However, when compared to the statement his view point on bitcoin has changed since then but the other qualities have been intact and have not seen much changes in his opinions.

FAQ

Who is Paul Krugman?

Paul Krugman is an American economist and journalist who received the 2008 Nobel Prize for Economics for his work in economic geography and in identifying international trade patterns.

Where did Paul Krugman go to college?

In 1974, Krugman earned his BA in economics from Yale University. He then pursued a PhD in economics from Massachusetts Institute of Technology (MIT). In 1977, he successfully completed his PhD in three years.

What is Paul Krugman's theory?

Krugman developed New Trade Theory as an alternative to older theories that explain patterns of international trade as based on comparative advantage and natural resource endowments.

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