Paul Krugman is the Nobel prize winner and warns of an impending cryptocurrency winter for blockchain-based projects. This includes Bitcoin and other cryptocurrency networks. The NYT opinion piece, published Dec. 1, discusses the true utility of this technology and the signs that point to a possible future decline.

Krugman doubts the utility of this technology, when there are many centralized options that work quite well. Krugman expressed his doubts about this technology by saying:

Why bother? What’s the point?

Krugman believes this, along with the recent collapse of FTX, one of the largest cryptocurrency exchanges worldwide, could lead to a complete abandonment blockchain and crypto technology. Krugman compared it with the Fimbulwinter which, according to nordic mythology, is a winter that precedes extinction.

Signs of Fall

Krugman says that there have been many signs that this abandonment is coming in recent months. Krugman cites as an example the recent write-offs that Maersk and the Australian Stock Exchange made about their blockchain-based projects.

Krugman also criticizes Bitcoin’s reason d’etre in open. He states that banks rarely steal assets from customers, but crypto institutions are more likely to succumb to temptation. Extreme inflation that damages money’s value usually occurs only amid political chaos.

Krugman also criticizes Bitcoin’s Proof-of-Work (PoW), estimating the environmental damage it has caused in the tens to billions of dollars. He added that there was no apparent benefit other than producing ‘worthless tokens’.

This opinion is however different than the one he shared on May 2021. He stated at the time that he didn’t believe in Bitcoin’s fundamentals, but he believed that the market could survive indefinitely. He said that cryptocurrency was like the housing bubble or the subprime mortgage crisis.