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Paul Krugman failed to understand the true value of blockchain technology and its associated crypto assets. His article conflates centralized and decentralized entities, permissionless and permissioned blockchains, and fails to understand the importance of digital tokens in providing security for distributed networks. His readers are going to pay the price.
Nobel laureate and respected NYT columnist Paul Krugman recently published an article in the New York Times. “Blockchains, what are they good for?”
Krugman is as famous for getting it wrong as he is for getting it right. Said “The impact of the Internet on the economy may not be greater than that of the fax machine.”
But, hey, he’s human like us, and we’re all entitled to make mistakes.
So, let’s give him the benefit of the doubt and take this article on its own merits.
Unfortunately, however, he’s back at it again as he clearly demonstrates his lack of understanding of blockchain-technology, blockchain (aka crypto), permissionless, intermediary-less, 24/7, decentralized, and self-contained. Sovereign economic model.
He links “crypto assets” to “crypto companies”. For example, referring to FTX as a “crypto company” is like saying that the New York Mercantile Exchange is a corn producer.
FTX A centralized entity that trades crypto assets. It’s definitely not a “crypto company”.
Crypto companies, as they are called, are decentralized, relying on distributed networks to guarantee code execution. Call them DAOs or ethics, but not institutions in the traditional sense.
That is the first violation.
None of the examples he cites prove how blockchain will affect industries (Maersk, the Australian stock market). They’re going to be great, permissioned blockchains, which – if you ask me – defeats the purpose of having an open, decentralized ledger. It is a form of distributed database. It is the back-end equivalent of a corporate intranet while the actual discovery is on the public Internet.
For a blockchain, or any distributed ledger technology, to really have value, it must be open, public and permissionless. That’s where innovation thrives, but only when there’s a way to guarantee the security of that network… and that’s where crypto assets come into play, a digital way to pay for digital security.
Krugman, at this point, presciently states,
“No doubt I’ll hear many more insist that I don’t get it. But it seems like I never really got it,
.. really don’t understand.
He doesn’t understand the difference between centralized and decentralized “organizations”. He doesn’t understand the difference between permissionless and permissioned blockchains, and he doesn’t understand the role of crypto tokens.
I feel bad for Krugman, but not that bad. After all, he will go down in history as a Nobel laureate.
I feel so bad for all the people who read his columns and miss out on a generational opportunity as a result.
About the Author: Jeremy Epstein Chief Marketing Officer of Radix. He has worked with leading, innovative blockchain-based companies including Dapper Labs, Arweave, SingularityNet, OpenBazaar and Zcash. Jeremy has authored three books, over 150 articles, and nearly 1000 blog posts on the impact of blockchain technologies on society and has presented several times to senior US Defense Department officials at the Pentagon.
read more: As a champion of individual rights, crypto should prevail: opinion
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