Is Krugman doing to Bitcoin what he did to oil?

Is Krugman doing to Bitcoin what he did to oil?

September 8th, 2015 | Deepak Bharadwaz

Krugman is no genius

Paul Krugman, the Nobel Prize winning American Economist was in the limelight once again for his comments regarding Bitcoin. This time he was on a panel at the 92Y’s 7 Days of Genius event. The panel was inappropriately called ‘The Genius of Economics’. Mr. Krugman has hated bitcoin since it’s birth. He has gone on record many times berating the currency and taking a knock at its supporters. He once said:

“Bitcoin fever was and is intimately tied up with libertarian anti-government fantasies.”

Statements like this are the reason he has earned the wrath of the bitcoin community. Though Mr. Krugman is an accomplished academic and an “alleged” expert when it comes to analyzing markets, we have reason to believe both statistically and historically that Mr. Krugman’s assessment of technological advancements has been off target more times than they have been accurate.

Krugman’s statements about bitcoin don’t matter

Mr. Krugman has been wrong about technology over the past two decades some of his predictions have been so horrible, one can only wonder why people invite him to speak anywhere.

Back to reality, the Internet has not only increased revenues of companies but companies solely based on Internet have emerged to be major players over the past decade. Whenever the rate of technological change has slowed, new technology has been innovated across various platforms strengthening the phrase information economy.

Remember Peak Oil?

If the technology related projections weren’t proof enough, it is also worth remembering how spectacularly wrong his predictions of doom turned out to be when he once proclaimed that “peak oil has arrived.”

“What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story.”

In reality, America has led the way and become the main oil-market innovator and five years down the line, we see that oil prices have fallen drastically which has also helped to bring down the price of other commodities as well. Mr. Krugman has a knack for failing to see how advancements in society and technology can alter the course of any prediction. In other words, Paul Krugman didn’t see the Prius or Tesla coming down the road.

Bitcoin will be his legacy

In the case of bitcoin as a form of currency, Krugman believes that it cannot be an effective store of value like traditional fiat because it is not backed by the government for its value. But what he fails to realize is that just like other technological innovations which have been adopted by masses, the bitcoin ecosystem will flourish, overcoming the commonly cited hurdles towards mainstream adoption.

It’s only a matter of time before governments finally reach a middle ground for the adoption of this technology by coming to terms with appropriate but not too restricting regulatory rules. This will eventually launch bitcoin into the mainstream.

Deepak Bharadwaz is a Market Data Analyst for IHB’s Bitcoin Trading Intelligence platform. Before trading bitcoin he was heavily involved in Intraday trading of Coffee and Cocoa Futures Contracts on the Inter-Continental Exchange (ICE) and London International Financial Futures and Options Exchange (LIFFE).

He trades the markets based on price action, supply-demand chain, fundamentals and macro-economic data inflow. His comprehensive understanding of various technical indicators guide him as he executes strategies based on technical analysis.

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