Nobel Prize Winner in Economics, Paul Krugman: Crypto Industry Will End in Oblivion


The economist and Nobel Prize winner in economics in 2008, Paul Krugman, has assured that it is possible that the virtual currency “will not be able to survive” to a possible regulation of the governments.

In a New York Times opinion piece, Krugman has explained that if the US government decides to regulate cryptocurrencies “would prevent them from promising unobtainable returns” and it would be “difficult” to find any advantage that traditional banks did not already offer.

Cryptocurrencies were born under the promise of being the substitute for banks. The goal was to have electronic currencies that could transfer money to another person just by sending them a number without having to trust a financial institution to record the transfer. “It has never been known exactly why anyone other than a criminal would want to do something like this.Krugman wonders.

Of interest: El Salvador will create a bitcoin administration agency

In November 2021, cryptocurrencies were mentioned for the first time in US law and added some cryptocurrency provisions to the Law of Investment in Infrastructure and Jobs.

Under the law, any company or person who “transfers digital assets on behalf of another person” will now be considered a “broker”, and each transaction must keep track of how much each user paid for each coin and how much profit or loss they made when it was transferred. sold, according to the portal.

According to the White House, the Infrastructure Investment and Jobs Act will generate “significant economic benefits” over the next few years, among other reasons, for “strengthening tax enforcement when it comes to cryptocurrencies”.

The economist explains that the value of cryptocurrencies is “very unstable” and that the exchange houses where they are purchased are “financial institutions, whose ability to attract investors depends on nothing less than the confidence of those investors.”

Namely, cryptocurrencies have become everything they hated: “A system of financial intermediaries whose ability to operate depends on the trust they project”.

The crypto industry has suffered several blows this year in what it has called the “crypto winter”. Bitcoin, the best-known digital currency, was worth nearly $60,000 last year and is currently valued at $17,000.

Also, several cryptocurrency firms filed for bankruptcy over the course of 2022. These companies include Voyager DIgital, Celsius Networks, and BlockFi.

But the deadliest blow has been the bankruptcy of the FTX exchange platform facing a huge financial deficit and a cascade of withdrawals from panicked users.

Can read: Crypto company BlockFi files for bankruptcy protection

Little confidence is being projected lately by some cryptocurrencies. FTX Traders Traders “They fled with billions of dollars from investors.”money that they used to “try to prop up, without success, Alameda Research, a company belonging to the same group,” says Krugman.

“Even if the value of bitcoin does not fall to zero (which could still happen), there is every reason to hope that the crypto industry, which looked so imposing just a few months ago, will end up in oblivion,” concludes Krugman.

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Nobel Prize Winner in Economics, Paul Krugman: Crypto Industry Will End in Oblivion