In an op-ed published Dec. 1, Nobel Prize-winning economist Paul Krugman warned that blockchain-based projects, including Bitcoin and other cryptocurrency networks, are heading for an eternal winter.
Regarding the recent collapse of the cryptocurrency exchange FTX, Krugman believes that this crypto winter may completely abandon blockchain and encryption technology. He likens it to Fimbulwinter, the winter before the end of the world in Norse mythology.
For Krugman, there have been several signs over the past few months that such an abandonment is coming. The economist cited the recent write-offs of their blockchain-based projects by several companies, including Maersk and the Australian Securities Exchange, as part of his rationale.
In addition, Krugman openly criticized Bitcoin‘s raison d’être, saying banks rarely steal customers’ assets, crypto institutions are more likely to succumb to temptation, and extreme inflation that destroys the value of currencies usually only occurs during political chaos.
Krugman also referred to Bitcoin’s Proof-of-Work (PoW) consensus, estimating its cost to the environment in the tens of billions of dollars, with no apparent benefit beyond producing worthless tokens.