Prominent economist Paul Krugman claimed the entire crypto market has entered an “endless winter” and will never recover again in an opinion published by the New York Times. He then doubled down on his theory citing the fact that his article attracted very little crypto bro outrage.
In his article, Krugman noted that crypto supporters believe that blockchain, the technology that underpins almost all cryptocurrencies, is a groundbreaking breakthrough. In short, blockchain is a decentralized ledger, which means it is in the public domain, sustained by clever protocols that induce many people to maintain records on many servers.
However, Krugman said he has never received a satisfactory answer to “What’s the point” of this? “Why go to the trouble and expense of maintaining a ledger in many places, and basically carrying that ledger around every time a transaction takes place?”
Another point that the economist brought up was the issue of trust. He noted that a major selling point for cryptocurrencies has been the fact that they are trustless, which means that you don’t have to trust a third party: a bank, a person, or any intermediary that could operate between you and your cryptocurrency transactions or holdings.
However, Krugman said recent failures in the crypto sector have shown that crypto institutions “more easily succumb to the temptation” to steal their customers’ assets. He gave FTX as an example, which used its customers’ assets to fund risky bets.
He even mentioned the use of blockchain technology to offer a lower-cost, more secure way to keep track of transactions. “But that dream appears to be dying, too,” he said.
A number of companies in different sectors had expressed their intention to use blockchain technology for a more secure solution. For instance, the Australian Securities Exchange (ASX) announced five years ago that it planned to use a blockchain platform to clear and settle trades.
However, the ASX has recently canceled the plan “in light of the solution uncertainty,” incurring a charge of AUD $250 million ($168 million). Likewise, shipping giant Maersk has announced that it is winding down its efforts to use a blockchain to manage supply chains.
“We are, many people say, going through a “crypto winter.” But that may understate the case. This is looking more and more like Fimbulwinter, the endless winter that, in Norse mythology, precedes the end of the world,” he concluded.
In a tweet citing the article, Krugman said he expected more outrage from crypto bros due to its “shocking” comments. “Maybe this era really is ending,” he added.