Paul Krugman is the gift that keeps on giving. The popular and supposedly progressive columnist has a special talent for prophesizing things that are already demonstrably false. Back in 1998, he predicted that the internet would have no greater impact than fax machines, because “most people have nothing to say to each other.” Yesterday, he said that crypto doesn’t matter because there are no use cases beyond speculation and criminal activity. Specifically:
“..Bitcoin and its relatives haven’t managed to achieve any meaningful economic role..”
Here is a quick summary of how wrong he is:
- Stablecoins on various public networks are now the fastest growing fiat payment method in the world. Krugman mentions Venmo as being useful in his column, but is ignorant of the fact that Ethereum will move more dollars in the month of May than Venmo, PayPal, Square and Adyen combined. This is why both Visa and Mastercard are scrambling to integrate stablecoins into their networks. Notably, unlike the FinTechs above, stablecoins do not discriminate based on nationality, wealth or immigration status. That’s the kind of access real progressives celebrate.
- DeFi is now the fastest growing banking system in the world. MakerDAO alone is bigger than 95% of all American banks by assets. It’s also on pace to earn more than $200m in profit this year, more than Chime, NuBank & Revolut combined (most neo banks don’t make money). Notably, unlike whatever bank Krugman uses, Maker does not discriminate based on nationality, income level, credit score or immigration status. That’s the kind of equality real progressives celebrate.
- Helium is now the fastest growing telecommunication network in the world. There are currently 40,000 access points located in 70 different countries, up from 4000 a year ago. Just as many devices are backordered. Unlike traditional telco networks, where mega corporations negotiate tower deals with wealthy landlords, Helium builds itself organically. Anyone who can scratch together a few hundred dollars can contribute their power and internet access and earn a return. Helium is also more likely to bring 5g access to certain rural communities than any corporation. That’s the kind of equality of access that real progressives celebrate.
- NFTs have already revolutionized the worlds of art, music, gaming, curation, social media and pop culture. They allow digitally native artists to make money selling their work, then keep making money as the work grows in value. They allow gamers to own their assets and escape political persecution. They allow otherwise unknown artists to smash sales records and for musicians to engage their fans directly. Most of all, they enable the liberation of the creator economy from the metastasizing cancer of corporate owned platforms like Facebook, YouTube, Spotify & Instagram. Returning the economics of creation to the actual creators is the kind of thing real progressives celebrate.
- Bitcoin has made a lot of poor, foreign, minority and young individuals rich. This is in stark contrast to private equity, venture capital, hedge fund or real estate investing, access to which is blocked by discriminatory accredited investor laws or high minimum-entry levels. Before crypto, the majority of people had no way of investing in the majority of assets. This is a distinction so stark that it’s worth repeating. Even in wealthy America, a shocking 54% of African Americans are underbanked, and people who can’t even get a bank account don’t get a brokerage one either. But anyone can buy a few bucks worth of bitcoin, or tokenized stocks, property, gold or a VC fund. That’s the kind of democratization of access that real progressives celebrate.
I spend a lot of my time educating people about blockchain and crypto, and always tell my students that in this domain more than any other, there are no dumb questions. Everything I’ve written about above is new and different, so there is a natural learning curve. But I have little tolerance for people who go out of their way to be ignorant. Paul Krugman writes for an influential paper and could have reached out to countless crypto experts to educate himself. Instead he chose to make revealing statements like this:
His statement is ostensibly true. Older rich white men can easily use a credit card to buy books on Amazon. But there are millions of poorer black and Hispanic Americans who don’t have that privilege. There are also millions of low-margin small businesses who don’t have the negotiating power of an Amazon and are crushed by fees. Stablecoins or tokenized CBDCs will solve that problem — the kind of progress that a real progressive would know about.
To be fair, fake progressives aren’t the only people who go out of their way to remain dumb on this topic. May 20th must have been “prove your ignorance about crypto day” because Greg Ip, the chief economist for the conservative Wall Street Journal, published his own embarrassingly bad column bashing bitcoin, one where he compared it to asbestos and Fentanyl. Like Krugman, Ip focuses mostly on the demonstrably false “bitcoin is only used by criminals” narrative (a theory whose credibility can further be judged by the fact that Donald Trump agreed).
Unlike Krugman, Ip must have at least done a little Googling, as he conceded the following:
International payments are one of the big selling points for stablecoins, which are much less volatile than other cryptocurrencies because they are backed by hard assets such as Treasury bills.
Blockchain is slowly finding its way into other applications from land registries to the “nonfungible tokens” now flooding the collectibles market.
But he then destroys his own credibility by saying the following:
Yet this simply shows that we can get the benefits of blockchain without crypto.
Blockchain without crypto is a fancy database operated by a corporation. There are practical uses for this, but none will solve the global problems of economic censorship, exclusion and exploitation. Those problems can only be solved via decentralization, and decentralization can’t happen without crypto.
I will gladly volunteer my time to educate these two columnists on this topic. If anyone reading this knows them, then please let them know. In the meantime, both get an F for not even trying. Not understanding a complicated topic is OK. Going out of your way to be ignorant is not.
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