Economist Paul Krugman compares crypto to the 2008 housing bubble in the US and also the subprime mortgage crisis. The noble-prize-winning individual also said that crypto doesn’t have any real value. This is not the first time we have heard prominent individuals say that crypto lacks intrinsic value. A while back, Warren Buffett also said that Bitcoin doesn’t have any value because it doesn’t produce anything.
Paul Krugman on crypto’s value
Paul said that crypto is not a house built on sand but on “nothing at all.” He compared the crypto market with the housing market that shook the United States in 2008 and pushed the economy into a recession. He also referred to the big short where we saw that the price of houses kept rising for years before the 2008 crisis. There was also too much debt in the market, and it didn’t make any sense. Ultimately the bubble burst, and “financial instruments that helped inflate housing would eventually be revealed as worthless junk,” said Paul.
Most importantly, at that time, it didn’t seem that anything was wrong, but only a few firms were able to figure it out. And according to Krugman, that is the current state of crypto. He pointed out that FTC is saying crypto is being used mostly by scammers as a payment medium. Paul also referred to the catastrophic crash of the Luna token and UST stablecoin, saying that it was neither “stable” nor a “coin.”
Crypto’s value
When it comes to claiming that cryptocurrency has no value, central bank officials and many well-known figures make a lot of arguments. The first is that crypto has no assets backing it, and the second is that it does not generate anything. To be clear, many cryptocurrencies are worthless or speculative, but if we simply consider Bitcoin and the top tokens, most of them provide genuine value. Some are used for low-cost, quick transactions, while others are used to create apps, smart contracts, and much more. The argument is that crypto does not need to produce physical goods to be useful.
To counter the first point, that there are no assets backing crypto, I’d want to ask one question. Is there anything that Gold is backed by? No! because it is a valuable asset in itself. That is what Bitcoin is all about. Many other cryptocurrencies serve a useful purpose, and their prices are decided by market demand.
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Also Read: Paypal adds new crypto features for users in the US.
