Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Nobel Laureate Dubs Crypto a ‘Ponzi Scheme.’ So What?

CryptocurrencyJun 12, 2021 12:01AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
Nobel Laureate Dubs Crypto a ‘Ponzi Scheme.’ So What?

  • Bitcoin is snowed under with critique after it displays heightened signs of volatility.
  • Bitcoin is a store of value and lacks currency functions.
  • In the current digital landscape, other digital payments provide more use cases.

Divergence in opinion creates a scenario that enables healthy debate regarding current global activities that affect the social-economic landscape. Having a one-sided view on a topic that some might not fully understand, on the other hand, is not well received by anyone who is passionate about, or genuinely understands the value of, something like blockchain or digital currencies.

Paul Krugman’s ‘Different’ View Of Crypto

In May, Paul Krugman, the 2008 Nobel laureate for Economic Sciences, and New York Times columnist, published an article in which he called cryptocurrencies a “long-running Ponzi scheme.”

His statement and commentary in The New York Times comes just after Bitcoin saw the crushing loss of nearly 50% of its all-time high value, in the wake of three government-backed Chinese institutions reiterating their stances on cryptocurrencies.

The self-proclaimed “crypto skeptic” has long held opinions in opposition to digital assets, comparing cryptocurrencies’ way of payment with the gold standard. He previously posited that crypto is a form of regression, setting the monetary system back 300 years.

Interestingly enough, his comments tend to materialize whenever crypto market sentiment is in decline.

In his article, he emphasized that Bitcoin has no usability outside price speculation, thus comparing it to a Ponzi scheme, adding that “the prices of these assets keep going up, so that early investors made a lot of money, and their success keeps drawing in new investors.”

In essence, he is comparing Bitcoin’s success to greed, and the mirage of a ‘get rich quick’ scheme.

According to Paul Krugman, cryptocurrencies are a technology that can’t be integrated into the fabric of society. Why? Because “blockchain” doesn’t perform currency functions, and as such one cannot purchase a house with cryptocurrency.

While there is a ring of truth to those words, there are instances where cryptocurrency payments are accepted. Not long ago, for instance, Tesla (NASDAQ:TSLA) was accepting Bitcoin as a method of payment. Furthermore, the payment processor NOWPayments has recently added ADA as a cryptocurrency payment method.

Krugman went on to underline that other alternative digital payments, such as Venmo, allow him to perform these economic activities. In his, later mocked, piece, he emphasized how other widely used technological items and services such as Zoom, iPads, and Venmo, have all become immersive parts of our societal norms.

While his argument appears solid at first, marketing has played an intrinsic role in allowing such technologies to become embedded in our way of life. It should not be forgotten that Bitcoin gained popularity organically, through supply and demand dynamics, while the aforementioned digital products are geared to a specific audience with for-profit purposes. They are not necessarily comparable.

On the Flipside

  • Chainlink 2.0.’s Whitepaper illustrates how a decentralized oracle could enable off-chain data to integrate effectively with blockchains.
  • Paul Krugman was awarded a Nobel prize for his explanation of patterns in international trade.
  • Both fiat currency and cryptocurrencies solve two distinct problems of society.
  • Governmental regulation could create a legal framework which enables cryptocurrencies to become integrated in everyday use.
  • According to ex-CIA officials, cryptocurrencies are a “boon for Surveillance” and are not only used for illegal activities.

Actually, People Do Like The Internet!

While Bitcoin has previously been criticized for not performing ‘regular’ currency functions, research suggests that Bitcoin is rather perceived by society as a store of value due to its volatility. In his opinionated column, Paul Krugman puffed that 12 years is an “eon for technology” and blockchain should have been able to integrate by now. He further emphasized that no “killer app” has been developed to embed cryptocurrency into our everyday activities.

Mr. Krugman’s column was met with significant criticism from The cryptocurrency community.

In a Tweet following the publication of his article, he stated that “this will get a lot of hate.” Particular emphasis was placed on Krugman’s previous assertions, which compared the internet’s impact on society to the impact of “a fax machine.”

The economist also expressed his opinion that the internet should slow because “people don’t have anything to say to each other.” While Mr. Krugman’s academic achievements are well-earned; some of his statements concerning technology lack essential foundations of validity.

From fundamentalist standpoints and current economic standards, Bitcoin and cryptocurrencies might appear to hold little intrinsic value, however, the dissociation of Ethereum from the concept of utilization is short-sighted, as Ethereum is actively being transacted, and represents one such example of crypto being used within the DeFi ecosystem.

Although Paul Krugman might prop-up traditional economic models as superior, cryptocurrencies have displayed the capability to disrupt previously held understandings of monetary value and ownership.


Join to get the flipside of crypto

Upgrade your inbox and get our DailyCoin editors’ picks 1x a week delivered straight to your inbox.

[contact-form-7] You can always unsubscribe with just 1 click.

Continue reading on DailyCoin

Nobel Laureate Dubs Crypto a ‘Ponzi Scheme.’ So What?

Related Articles

Good News! Solanium (SLIM) Gets Listed on KuCoin
Good News! Solanium (SLIM) Gets Listed on KuCoin By CoinQuora - Sep 26, 2021

KuCoin announced that Solanium (SLIM) is now available on its trading platform. This venture will support trading pairs like SLIM/USDT and SLIM/SOL. In a recent tweet from KuCoin...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Dave Tromp
Dave Tromp Jun 12, 2021 3:04AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barack dronebommer was also awarded the Nobel prize. Doesn't mean much if you ask me.
Mike The Fonz
Mike The Fonz Jun 12, 2021 1:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Lol. Ok homie. Stick tonthat dollar. Dont buy bitcoin. Let me buy it all cheaper.
Matt Zee
DankDude Jun 12, 2021 1:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Market dips always bring out the bottom feeders desperately seeking relevance.
Khalid Khan
Liwuney Jun 12, 2021 1:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Krugman must never have heard of hyperinflation where the value of some currencies has halved in 24 hours. Are those currencies a better store of value?
Devin Phalen
Devin Phalen Jun 12, 2021 12:12AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Krugman is correct, Bitcoin is a useless pump amd dump. Some Cryptos have uses and will survive, but Bitcoin has no use - certainly bot as a store of value.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email