Many years ago, I ran a hedge fund on Wall Street. Due to the long pause in charity and government work, I finally found the way to the blockchain. Now, I spend a lot of time writing articles about decentralized finance and centralized finance. Some of my old Wall Street friends still operate large amounts of money in hedge funds. Back in 2018, they will tease me and ask if I am still “making my cryptocurrency”. Even today, some of them still think Bitcoin (Bitcoin) Is a Ponzi scheme.One of my closest friends in the financial world recently sent me Nobel Prize winner and economist Paul Krugman’s opinion column on Bitcoin in the New York Times, which is further strengthen The argument for the false world of cryptocurrencies. So, I accepted the challenge to answer Paul’s proposition.
Obviously, Krugman is not optimistic about cryptocurrencies. The first article he published in the New York Times in 2013 was very clear, Titled “Bitcoin is evil” (I certainly hope he has not been short).
But in fact, I can see where he comes from. To be honest, I can think of many aspects of cryptocurrency that need to be improved. That being said, in 2021, repeated clichés such as “Bitcoin is only good for illegal activities” or “Bitcoin has no real use in real life” are no longer applicable. To be respectful, I am looking forward to more Nobel Prize winners in economics.
Krugman first compared Bitcoin’s alleged lack of progress in the past 12 years (since its birth) with other technologies (such as Venmo, iPad, or Zoom) that have flourished and become an important part of our lives.
Well, let’s start by checking the public exposure of Bitcoin. What started as a super niche software (sorry, Satoshi), Growing into a $1 trillion asset class (At its peak) as shown in the chart below-faster than any other asset-and has become one of the hottest research topics for leading central banks and commercial banks, as well as global technology companies. Not to mention, it has been the subject of multiple U.S. Senate (and other parliament) hearings about its regulatory and economic impact.
More interestingly, Krugman completely ignored the fact that despite repeated attempts by multiple governments to fight Bitcoin and cryptocurrencies, this progress has already taken place.
In my opinion, the resilience of a government’s sovereignty can be measured by two main factors: national security and economy. What can better measure economic elasticity than currency?In the past, Krugman claim That “fiat currency […] The support of men with guns” may explain why he ignored the fact in this article that most governments believe that cryptocurrencies are a direct threat to their national currencies, so they try to fight against them. Some people Try to ban encryption, while others avoid establishing a clear regulatory framework. This reason alone can explain why cryptocurrency has not yet become a part of our daily lives.
Some use cases of blockchain technology
Krugman went on to make the weak point that he had never heard a clear answer to this simple question: What is the use of cryptocurrency and/or blockchain?
First of all, I am puzzled by this contradiction, because cryptocurrency is a use case of blockchain, and also because Satoshi Nakamoto gave a very clear answer to this question in 2008: Bitcoin will replace the fiat currency of the central bank . I believe that Krugman has the opportunity to discuss this issue with the most knowledgeable and smartest blockchain and encryption experts.
I admit that other use cases of the blockchain (except finance) are not easily available, and he may not believe that the perfect transparency and inclusiveness provided by the blockchain may have an impact on better supply chain management, financial and aid funding control, through A cleaner public procurement platform combats corruption and eliminates the capture of elites, struggle The proliferation of abusive images of minors and so on.However, I cannot understand how Krugman can ignore the impact of cryptocurrency on people living in a collapsing economy, such as Venezuela, Or they may save billions of dollars in immigration remittance fees.
On the contrary, Krugman believes that cryptocurrency may just be the most popular Ponzi scheme, featuring “technical nonsense” and “liberal derp”, and at the same time as gold. In fact, Krugman believes that the two are similar: “After all, gold faces almost the same problems as Bitcoin.” In many circles, Bitcoin is called “digital gold.” Interestingly, apart from Krugman’s quotation, I can’t think of a better argument in support of what cryptocurrency believers might hope. He later beautified the “mystery” and “semi-sacred status” of gold, claiming that cryptocurrencies may never achieve this. Maybe he was right; however, he did not explain how he came to this interesting conclusion. Essentially, this argument is equivalent to knowing that chocolate ice cream tastes better than vanilla.
Bitcoin and illegal activities
Last but not least, I would like to address the argument repeatedly raised by Krugman and others that Bitcoin is closely related to illegal activities. Its Pavlovian cryptocurrency conditions can lead to ransomware and drug trafficking. And money laundering.
Yes, Bitcoin and other cryptocurrencies have been and are still being used by bad actors to fund their illegal activities. But by the way, the same goes for cash, gold, and bank accounts.In another article, I Explanation Bitcoin is actually more suitable than fiat currency to help law enforcement agencies prevent illegal financial activities.
Allow me to presume to say: The owners or users of most cryptocurrencies are not criminals. They are law-abiding citizens, no matter where they are. It is the lack of clear regulations that exacerbated the problem. Not only does the lack of supervision fail to prevent all legal loopholes exploited by bad actors, but it also prevents most users from obtaining clear guidance on what they can and cannot do, thus keeping everyone in the same bucket as the suspected criminal . In my opinion, regulators must react faster and supervise the crypto market as soon as possible. Some people work hard to achieve this goal, but most of them have not done enough.
Although Krugman and I have different views on Bitcoin, blockchain and its value to the world, we do agree on one thing: they will stay. The more these topics are discussed and shared, the more people will come into contact with the issue, understand it and form their independent opinions.
This is how the concept evolved. In fact, such a well-respected Nobel laureate and economist wrote a commentary on Bitcoin in one of the most popular newspapers in the world-twice already-to prove the cryptocurrency pair The impact of our lives, and may have an impact on our future. For our true believers, the potential impact and benefits that this technology can create in the future are sufficient.
This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should research on their own when making a decision.
The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Neta Colin He is the co-founder of Orbs and Hexa Foundation. Before joining Orbs, Netta served as a senior adviser to General Mordechai Hod on special projects of the Israeli Ministry of Defense, and as a senior adviser to Deputy Foreign Minister Michael Oren in the Prime Minister’s Office. Netta started his career as an investment banker on Wall Street and later became a hedge fund manager. She has extensive experience in philanthropy and has served on multiple boards of directors in Israel and the United States for more than 15 years, and held senior positions on the executive committee.