Crypto Community Tells Paul Krugman: Bitcoin Is Perfectly Capable Of Protecting Itself, Doesn’t Need Guns
Bitcoin Is Perfectly Capable Of Protecting Itself, Paul Krugman
Paul Krugman is a Nobel Prize winner in Economics thanks to his expertise and accomplishments in their field. To this end, his insights into international economics are often accurate. However, his recent attack on Bitcoin and cryptocurrencies, in general, may have missed the mark, and several other experts in economics were quick to point out his mistakes.
Paul Krugman’s recent column in the New York Times criticized cryptocurrencies of inefficiency by suggesting that they do not solve any particular challenges. His overall argument seemed to imply that cryptocurrencies were doomed to fail with time.
Paul Krugman also argued in favor of fiat currencies while demonizing cryptocurrencies. One of the bases of his arguments for fiat currencies is the fact that they are backed by the government. To be precise, Mr. Krugman stated that fiat currencies are unlikely to fail even if the masses lost confidence since they are backed by “men with guns”.
Paul Krugman’s column elicited a fiery debate with people on both sides of the argument pitching in. Economics Professor Saifedean Ammous was one of the most vocal responders with counter-arguments for both of Krugman’s arguments.
Men With Guns Can’t Do Much
Professor Ammous was quick to highlight the situation in Venezuela, Zimbabwe, Iran, and Libya in a bid to refute the idea that fiat currencies cannot fail simply because they are backed by governments and militaries. For instance, Venezuela is grappling with astronomical inflation in spite of the current president’s strong-man approach. To this end, any fiat currency is capable of failing if the masses –who actually use it and uphold its value – lose faith in it. Even radical solutions such as printing more money simply lead to further inflation as explained by Professor Ammous.
Cryptocurrencies Have a Purpose…
Professor Ammous also reminded Mr. Krugman that Bitcoin, and cryptocurrencies in general, were developed with a purpose. He pointed out Bitcoin’s role in international finance to this effect.
Bitcoin has often been criticized for its incapability to integrate with global financial services such as PayPal and Visa. However, it doesn’t need to, according to opportunists – in fact, it was not designed to be compatible with these systems.
According to Professor Ammous, Bitcoin is essentially a replacement (or rather an alternative) for central bank payment systems. It is already a popular global remittance option across the world and especially in developing regions. For instance, many companies in Africa, the Middle East, and South East Asia are using Bitcoin and other major cryptocurrencies for remittance solutions. This is because of the conveniences associated with transacting cryptocurrencies. These include lower transaction charges, quicker transaction times, and top-notch privacy and security. This is in contrast with central banking systems that have hefty charges slow transaction times, and the interference of many third-parties.
Paul Krugman is a renowned and accomplished economist popular for his accurate economic and financial insights. However, his latest attack on Bitcoin and cryptocurrencies may have been misinformed considering the counter-arguments posed by opportunists and Professor Ammous in particular.