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A Rebuttal To Paul Krugman’s Tone-Deaf And Out-Of-The-Loop Opinion Piece | Bitcoinist.com

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Nobel Prize winner Paul Krugman doesn’t know when to stop. After more than a decade of being wrong about Bitcoin, he keeps adding bad takes to his resume. In his latest piece, “How Crypto Became the New Subprime” he willfully shows his ignorance about the matter at hand, confuses very basic concepts, and colors it all with racist and classist undertones. Plus, the whole piece is based on the worst comparison conceived this year. (it’s still early, though!) 

Related Reading | How Self-Proclaimed Tech Know-Nothing Paul Krugman Got it Wrong… Again

What’s with these award-winning economists and Bitcoin? Do they actually don’t understand it or are they playing dumb to big up the system that made them rich and famous? Are they actually getting paid to discredit Bitcoin? Because they’re doing a poor job at it. In this case, it might be Paul Krugman’s worst take to date. And this is the man that said “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”

The Award-Winning Economist’s Tricks

Paul Krugman’s first trick is to mix up Bitcoin with other cryptocurrencies. Does he not know that they’re not the same thing and don’t have the same goals or characteristics? Or is he purposely muddying the waters? In either case, he begins the article talking about Bitcoin, and about halfway through, he switches to crypto. It’s a cheap trick that’ll only confuse unsophisticated award-winning economists. 

The author’s second trick is to pretend that people lost gazillions of dollars just because the market took a downturn. The only people that lost money are the ones that sold. People that are still holding have not made a profit nor lost their savings, they’re in a Schrödinger’s cat situation. That’s not ideal, but it’s not catastrophic as Krugman is pretending it to be.

Krugman’s third trick is that he never mentions inflation. Consciously, the people might not know that the government’s rampant money printing is eroding their savings by the minute. Unconsciously, though, they feel it. And they know that they have to do something. Roll the dice. Protect themselves.

What Did Paul Krugman Say Exactly?

Even though the comparison to the subprime mortgage crisis is a huge stretch, the man’s thesis is not controversial:

“Well, I’m seeing uncomfortable parallels with the subprime crisis of the 2000s. No, crypto doesn’t threaten the financial system — the numbers aren’t big enough to do that. But there’s growing evidence that the risks of crypto are falling disproportionately on people who don’t know what they are getting into and are poorly positioned to handle the downside.”

People that haven’t figured out that Bitcoin is the best asset ever created, and are looking for “the next Bitcoin” in the altcoin world, are going to get wrecked. That much is true. If Paul Krugman had made the distinction between those two very different concepts, his article might’ve been worthwhile.

However, then he talks about Proof-Of-Work mining and throws this pearl:

“Skeptics wonder why this is necessary and argue that crypto ends up being an awkward, expensive way to do things you could have done more easily in other ways, which is why cryptocurrencies still have few legal applications 13 years after Bitcoin was introduced.”

The Bitcoin monetary network is decentralized and doesn’t require a trusted third party to work. Proof-Of-Work mining is necessary because it’s the way the system achieves this tremendous feat. Could it be done “more easily” in a centralized way? Maybe, but we would have to trust a central entity. That’s what we’ve been doing so far, and the world is about to collapse because of that. A monetary network that central banks, governments, and award-winning economists can’t manipulate, that’s the legal application the world needs.

Also, notice how Krugman outsources the criticism saying “Skeptics wonder.” Stand by your word, economist.

BTC price chart for 01/31/2022 on Bitstamp | Source: BTC/USD on TradingView.com

More Questions With Obvious Answers

“But now crypto has crashed. Maybe it will recover and soar to new heights, as it has in the past. For now, however, prices are way down. Who are the losers?”

Steve Hanke, Paul Krugman, and other award-winning economists that can’t figure out Bitcoin are the losers.

As an example, look at this slightly racist diatribe:

“Investors in crypto seem to be different from investors in other risky assets, like stocks, who consist disproportionately of affluent, college-educated whites. According to a survey by the research organization NORC, 44 percent of crypto investors are nonwhite, and 55 percent don’t have a college degree. This matches up with anecdotal evidence that crypto investing has become remarkably popular among minority groups and the working class.”

It’s only logical that the people who need Bitcoin the most, are the ones initially attracted to it. It’s a shame that award-winning economists don’t use their position to educate the working class about the difference between Bitcoin and all other cryptocurrencies, but here we are. In any case, “minority groups and the working class” are doing something with their money because they feel the purchasing power melting away.

“NORC says that this is great, that “cryptocurrencies are opening up investing opportunities for more diverse investors.” But I remember the days when subprime mortgage lending was similarly celebrated — when it was hailed as a way to open up the benefits of homeownership to previously excluded groups.”

So far, this is the worst comparison conceived this year. It’s hard to believe an award-winning economist had the gal to base a whole article on a barely-there premise.

“And cryptocurrencies, with their huge price fluctuations seemingly unrelated to fundamentals, are about as risky as an asset class can get.”

That’s true if you’re talking cryptocurrencies in general, but not true if you’re talking Bitcoin.

Paul Krugman Closes This Off With An Undeniable Truth

This much is true:

“Now, maybe those of us who still can’t see what cryptocurrencies are good for other than money laundering and tax evasion are just missing the picture.”

Yes, Paul Krugman. You are missing the picture. Don’t spread misinformation. Do better.

“If you ask me, regulators have made the same mistake they made on subprime: They failed to protect the public against financial products nobody understood, and many vulnerable families may end up paying the price.”

Related Reading | This New Bitcoin ‘FUD Dice’ Makes Paul Krugman Obsolete

Nobody asked Paul Krugman about this, because he’s been consistently wrong about Bitcoin for more than a decade. If he’s so concerned about “vulnerable families,” he’d do well researching the topic. Finding out why the SEC makes a sharp distinction between Bitcoin and other cryptocurrencies, and spread that message among said “vulnerable families.”

Featured Image by Jakayla Toney on Unsplash  | Charts by TradingView

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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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dYdX Founder Advises Crypto Industry to Abandon US Customers, Deeming Market Effort Unrewarding

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The founder of the decentralized exchange, dYdX, asserts that individuals involved in cryptocurrency development should direct their efforts toward international markets beyond the United States for the upcoming five to ten years.

Antonio Juliano conveys to his audience of 49,400 on the social media platform X that the prevailing regulatory uncertainty within the United States does not merit the associated challenges or concessions.

Juliano contends that it would be more prudent for cryptocurrency developers to establish their products in alternative countries and subsequently re-enter the United States from a position of strength.

“Cryptocurrency developers would be well-advised to temporarily discontinue catering to the US market and instead seek re-entry in a span of 5-10 years. The complications and compromises involved do not warrant the endeavor. Moreover, a substantial portion of the market exists overseas. It is recommended to innovate in those regions, ascertain product-market fit, and then return with greater bargaining power…

The paramount objective shared among all stakeholders is to secure a significantly more potent product-market fit for cryptocurrency. The pursuit of a robust product-market fit does not necessitate flawless distribution. A multitude of substantial overseas markets present avenues for experimentation.”

Juliano articulates that advocating for more amiable cryptocurrency regulations demands time, although the process could be expedited if developers manage to introduce products that elicit consumer demand.

“However, this perspective does not undermine the importance of efforts to influence US cryptocurrency policy. On the contrary, such endeavors are absolutely vital. Given the protracted timeframe required (in anticipation of re-entry), and considering that much of the world takes cues from the United States, it becomes evident that our progress in shaping policies hinges upon achieving global-scale product usage.”

The dYdX founder proceeds to emphasize that, with time, American citizens will come to realize that cryptocurrency is inherently aligned with US values and principles.

“The tenets of cryptocurrency closely align with American values. What concept could be more quintessentially American and reflective of capitalist ideals than a financial system conceived for the people, driven by the people, and answerable to the people? This, indeed, constitutes the very essence of our endeavor.”

Read Also: Bloomberg Analyst Mike McGlone Predicts Bitcoin Vulnerability in Economic Downturn

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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Bloomberg Analyst Mike McGlone Predicts Bitcoin Vulnerability in Economic Downturn

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Bloomberg Intelligence’s senior macro strategist, Mike McGlone, is conveying a pessimistic outlook for Bitcoin (BTC) in the immediate future.

During a recent interview on Kitco News, McGlone underscored that Bitcoin is currently displaying bearish signals even amidst the ascent of other high-risk assets.

“In the event of a downturn, adhering to a rule prevalent in bear markets, resources across the board could witness a reduction in value, and Bitcoin will not be an exception.

A crucial observation is the necessity for Bitcoin to exhibit divergent strength at a certain juncture, akin to the behavior of treasury bonds and gold in a deflationary economic environment. Regrettably, this pattern has not materialized.

After attaining its peak towards the conclusion of Q1, reaching approximately $31,000, driven by optimism and the influence of exchange-traded funds (ETFs), Bitcoin subsequently retraced to $25,000 or approximately $26,000. Presently, it is manifesting divergent weakness in contrast to the concurrent upsurge in the stock market.”

According to McGlone’s analysis, the ongoing “economic reset” implies a continuation of Bitcoin’s recent downward trend, although he anticipates that the premier cryptocurrency will ultimately attain a six-figure valuation.

“While I believe that Bitcoin will eventually achieve a valuation of $100,000, the onset of a global economic reset, as I anticipate, characterized by a standard deflationary recession leading to a decline in the housing and stock markets, analogous to the conditions of 2008—though arguably exacerbated due to the ongoing removal of liquidity from the system—Bitcoin’s role as an influential precursor comes to the forefront.

This underscores my point that Bitcoin has recently been taking on the role of a harbinger of trends. Its value ascended briefly to around $31,000, only to subsequently trend downwards. From my perspective, it serves as a leading indicator for a majority of high-risk assets.”

As of the time of writing, Bitcoin is trading at $26,079.

Read Also: Carbon Footprint of Proof-of-Work vs. Proof-of-Stake: A Comparative Analysis of Blockchain Consensus Mechanisms

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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Lead Developer Announces Imminent Public Reopening of Shibarium

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Shiba Inu’s (SHIB) Latest Layer-2 Scaling Solution Nears Public Relaunch Following Recent Technical Challenges

Shytoshi Kusama, the enigmatic lead developer behind the SHIB project, has shared in a recent blog post that significant progress has been made in addressing the technical setbacks that temporarily halted the operation of Shibarium, SHIB’s new layer-2 scaling solution. The initial release of Shibarium encountered network issues that prompted its temporary closure. However, Kusama assured the community that diligent testing and parameter adjustments have led to notable improvements.

Kusama elaborated, stating, “After extensive testing and parameter refinements aimed at achieving a ‘ready’ status, Shibarium has undergone enhancements and optimization. While still undergoing testing, it is now successfully producing blocks.” Additionally, to prevent a recurrence of the past network overload, Kusama revealed the implementation of a new monitoring system and supplementary fail-safe measures. These include rate limiting at the RPC (remote procedure call) level and an automated server reset mechanism in the event of another surge in traffic.

With these advancements in place, the team is on the verge of reopening Shibarium to the public. As part of this progression, more network validators will be integrated into the ecosystem on August 23rd. Kusama emphasized the significance of this step, remarking, “Tomorrow, additional validators will become operational, expanding the options available for staking BONE. This will allow for a distribution of rewards earned through their roles within our community. As testing concludes, we will once again prepare for public utilization.”

Shibarium’s previous technical difficulties were attributed to an overwhelming influx of users and transactions during its initial launch. As of the current writing, SHIB is trading at $0.00000798, marking a 0.4% increase over the past 24 hours.

Read Also: Sam Bankman-Fried, Co-Founder of FTX, Files for Temporary Release from Incarceration

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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Sam Bankman-Fried, Co-Founder of FTX, Files for Temporary Release from Incarceration

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FTX’s co-founder, Sam Bankman-Fried, is currently seeking a temporary release from incarceration. The purpose behind this endeavor is to engage in collaborative strategizing with his legal representatives within the confines of the federal courthouse situated in Manhattan.

In a formal letter dispatched to US District Judge Lewis Kaplan on a Friday, Bankman-Fried’s legal team expounded that their client’s capacity to effectively scrutinize the extensive legal documents pertaining to his case has been significantly curtailed during his time spent incarcerated at the Metropolitan Detention Center (MDC) in Brooklyn.

Christian Everdell, the attorney representing Bankman-Fried, divulged that the government recently disseminated a voluminous three-quarters of a million pages of Slack communications. These were originally due several months prior. Expressing the urgency of the situation, Everdell articulated, “Only last week did the government furnish an aggregate of approximately seven hundred and fifty thousand pages of Slack communications that were originally stipulated for release months ago. Given the current timeline, it is a futile endeavor for Mr. Bankman-Fried to endeavor to review these materials.”

He underlined the pivotal necessity for Bankman-Fried to collaborate meticulously with his legal team, emphasizing his dire need to avail himself of an internet-enabled laptop within the courthouse premises. Such a resource would undoubtedly expedite the process of comprehensive document review, an imperative undertaking in light of his impending fraud trial scheduled for the forthcoming October.

In riposte to Bankman-Fried’s plea for reprieve, the prosecuting body voiced apprehensions regarding his adherence to the prerequisites concerning his planned defense strategy. Notably, they underscored that Bankman-Fried is yet to furnish the complete gamut of essential information regarding the counsel upon which he predicated his actions.

The prosecutors proffered caution that unless Bankman-Fried promptly discloses the minutiae regarding the counsel he received and the provenance thereof, any attempt to interject such a defense during the trial should be summarily proscribed.

Although the prosecutors extended an offer to facilitate the transfer of documents onto hard drives for Bankman-Fried’s perusal within the MDC premises, a viable laptop-based solution was deemed unattainable. Initially, the notion of relocating Bankman-Fried to a more compact, upstate correctional facility where he could access an internet-enabled laptop was contemplated by the prosecutors. However, this proposal was met with resistance from prison officials.

Regarded for its starkly onerous conditions, the Metropolitan Detention Center has cultivated a notorious reputation among its inmate population.

Bankman-Fried’s Incarceration Stemming from Unsanctioned Internet Utilization

As documented, Judge Kaplan sanctioned the re-imprisonment of the beleaguered cryptocurrency luminary, citing alleged instances of witness tampering.

In that juncture, Judge Kaplan pronounced that a strong prima facie case existed indicating that the accused had endeavored to tamper with witnesses on no fewer than two separate occasions.

The decision was additionally influenced by Bankman-Fried’s unsanctioned use of the Internet while released on bail under the guardianship of his parents at their abode located in California.

Judge Kaplan discerned that Bankman-Fried had indulged in excessive communication with various individuals via electronic correspondence, even resorting to the utilization of a virtual private network.

Concurrently, the disgraced progenitor of FTX is simultaneously grappling with novel allegations brought forth by the Department of Justice (DOJ). These allegations encompass the misappropriation of customer deposits, including the purported embezzlement of said funds.

An indictment filed on the most recent Monday delineates that Bankman-Fried stands accused of diverting and embezzling customer deposits from the FTX platform. The illicitly obtained funds were purportedly channeled towards political campaign contributions, collectively amassing a substantial sum exceeding one hundred million dollars, in advance of the 2022 US midterm elections.

The indictment further posits that despite Bankman-Fried’s intimate knowledge of FTX’s fiscal insufficiencies, he continued to channel the purloined funds into personal investments, acquisitions, and political campaign contributions.

Read Also: U.S. Securities and Exchange Commission Nearing Appeal in Ripple Lawsuit's XRP Decision

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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U.S. Securities and Exchange Commission Nearing Appeal in Ripple Lawsuit’s XRP Decision

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The U.S. Securities and Exchange Commission (SEC) is taking significant steps towards pursuing an appeal in their recent legal battle against Ripple, indicating a potential shift in the course of the lawsuit.

James K. Filan, an experienced defense attorney specializing in crypto-related legal matters, has shed light on the latest developments. District Judge Analisa Torres has initiated a structured process for considering the SEC’s request to present an interlocutory appeal—a move that would allow the SEC to contest certain aspects of the ongoing case.

It’s important to note that this preliminary step does not guarantee the authorization of an interlocutory appeal; rather, it signifies that the SEC has been given the opportunity to formally request such an appeal.

Judge Torres has outlined the timeline for this process in her official order. The SEC is expected to file their motion for the appeal by August 18th. Subsequently, Ripple is given until September 1st to submit their opposition papers. If the SEC deems it necessary, they have until September 8th to file a reply.

The news of these developments had an immediate impact on the cryptocurrency market. Following the announcement of the judge’s order, the value of XRP experienced a sharp decline. The price, which had been trading at approximately $0.571, dropped to around $0.499 at the time of writing. This decrease of over 12% aligns with the broader trends observed across the cryptocurrency landscape.

The legal clash between the SEC and Ripple began when the regulatory agency filed a lawsuit against the San Francisco-based payments company in late 2020. The SEC alleged that Ripple had engaged in the sale of XRP without registering it as a security.

In a significant turn of events last month, Judge Torres issued a ruling that had mixed implications for both parties. She determined that Ripple’s automated programmatic sales of XRP, which occurred on the open market, could not be classified as securities offerings—a pivotal point of disagreement between the SEC and Ripple.

However, the judge did uphold a key aspect of the SEC’s argument. She agreed with the agency’s assertion that Ripple’s direct sales of XRP to institutional buyers indeed amounted to a securities offering, reinforcing the complexity of the case.

As the legal battle continues to unfold, the spotlight remains on the actions and responses of the SEC and Ripple, and how their ongoing dispute could shape the future regulatory landscape for cryptocurrencies and digital assets.

Read Also: Helium (HNT), a cryptocurrency project built on the Solana blockchain, introduces its new mobile phone plan.

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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