It does not seem that Paul Krugman, winner of the Nobel Prize in Economics in 2008, is convinced by the current ecosystem of cryptocurrencies. And it’s not just that, it’s also compares their current situation with the one we lived in nearly fifteen years agoand which gave rise to a crisis whose effects resonated throughout the world, and which is still well remembered today by those who suffered its consequences… that we are the vast majority.
A key element for the subprime mortgage crisis to explode, to which Paul Krugman alludes, was the bubble that was generated around housing, with prices rising like wildfire, while financial institutions granted mortgage loans almost with their eyes closed, without risk analysis. The almost universal belief was that the price of housing could never fall, only a few realized that the situation was unsustainable, and that sooner or later the bubble had to burst, something that it finally did in 2008.
With some particularly forceful phrases, Paul Krugman equates the consideration that housing had as an investment before the bubble burst, with the current mentality of the cryptocurrency ecosystem and its investorsand what is more, suggests that the “end” of them can come with such an explosive blowout, for investors, like the one we experienced when it was more than proven that the price of housing could indeed fall, and much .
«Cryptocurrencies have become so valuable and popular that people mistakenly assume that they are worth something.Paul Krugman states in a column published in The New York Times entitled From the Big Short to the Big Scamfrom the great “short” (investment that bets on a negative return on the asset in which the investment is made) to the great scam, also including the reference The Big Short, the title of the film that tells the story of the crisis of the subprime from the point of view of the few who knew how to see what was going to happen before it happened.
Like the confidence in home values that gave rise to the subprime crisis, Paul Krugman believes that today we live in a situation in which the large number of opinions that consider cryptocurrencies such as Bitcoin and Ethereum to be an excellent investment, cThey condition many people who are incredulous before the messages against. And, consequently, they join in as investors, swelling a bubble that could be closer to bursting every day.