In an opinion piece published in the New York Times, Krugman caught the attention of the crypto industry with a lengthy review of Bitcoin and the crypto markets in general.
“One fact that even gives crypto-skeptics like me pause is the durability of gold as a highly valued asset. Gold, after all, suffers from much of the same issues as Bitcoin. People may think of it as money, but there is no attribute of a useful currency: you can’t actually use it to transact – try buying a new car with bullion. gold – and its purchasing power has been extremely volatile. ”
The economist goes on to suggest that governments could crack down on crypto much harder than they have ever done with gold, and that “Bitcoin and its relatives have failed to play a significant economic role. “.
Prominent crypto leaders spent a day in the field responding to Krugman on Twitter, including Three Arrows Capital CEO Zhu Su, who recalled the economist of a less than stellar internet prediction and misinterpretation of Metcalfe’s Law and network effects.
“Underestimate the network effects at a huge cost.
Anyone know if Krugman has ever analyzed why and how he got it wrong?
Network effects have also been cited as a bullish catalyst in crypto by macro guru Raoul Pal. He says network effects are the main driver of value behind the emerging asset class.
“It’s astonishing, the network effect. And we bring the institutions in and they spill over into Ethereum, and everyone makes products. It’s happening to us at lightning speed, and I don’t think the space can catch up with the narrative shift that’s happening so quickly.
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Image en vedette: Shutterstock / lassedesignen