Nobel Economist Paul Krugman says Bitcoin is Erasing 300 Years of Monetary Evolution. He believes that crypto currency will lead to a monetary regression that is likely to undo several years of efforts towards economic affluence. The Nobel prize winner is a regular columnist to NY Times.
He has come to the conclusion not after extensive study and observation over the years, but a few moments of wondering about a conference. The skepticism according to him is really because he wanted to challenge himself to find issues concealed in the nooks and crannies of blockchain and crypto world just to get to a newer and more innovative stance on crypto currency, something analysts love doing.
After extensive thinking and research on the subject the writer concluded that all crypto psyche boils down to two things ‘transaction costs and the absence of tethering.’ Meaning that over a very long period of economic history in modern times, brainiacs and thinkers have dedicated huge amounts of blood and sweat on making things more efficient. This efficiency is divided in to two broad categories categorically speaking:
- The optimization of resources applied
- The maximization of worth produced
So if a genius was to revolutionize the finance market in say the pre-crypto world, he or she would try to make both variables more and more efficient. This would mean that the market must be middle man free, tax free, speedy and borderless among other qualities. Any move away from strict government controls would mean amazing breakthroughs. Similarly to help the market, innovation must swell, that’ll lead to a successfully flourishing speed of evolution and progress. Other than policies and an inclination towards innovation, the market must require physical and social catalysts that help propagate the same values in other economies to expand markets and make use of absolute advantages and specializations like any other industry say fabrics or automobile fuels.
Basically, removing market barriers and deregulating have been a dream in the world before crypto technology disrupted on to the stage. With an added touch of healthy ventureful globalization that has helped heat the catalyst up a few more notches.
The reduction in ‘friction’ to economic transactions is the defining fact about cryptocurrency. It is the new normal that has changed not only what businesses can do and how they do it but also why they must.
These reinforcements would not have been as strong and as powerful as they are today, making the industry a gigantic and single most heavily decentralized market in the entire global economy, if it were not for the breakthrough and innovation that bitcoin has invested and introduced.
The first mover is not the leader though, the first follower is. It must be owed to the following currencies who must have wondered and believed in what the paper forecasts and told them about crypto markets that had just been incepted. The seeds of innovation are tough and highly frustrating to plant, but ever since, they have been reaping it with currencies like ethereum and ripple.
The financial industry has taken the longest route to crypto. It started with Medici banks, lending silver and gold in the pre colonial world. Then moving on to bank notes, checks and then online banking. Prize bonds, lotteries and gambling became more and more sophisticated as time passed and today even billions of dollars of transactions can be made in a few clicks.
Instead of high costs of doing business and expansion, bitcoin has offered instant transfers, low fee wastage and high head start to economic prosperity in no time.
‘And these costs aren’t incidental, something that can be innovated away.’ So all the years that have been undone are the result of bitcoin. All the hard days now will be easily forgotten and wiped off as unimportant and irrelevant, there is no next because this is as good as it gets, atleast, so far in this world.