The Nobel Prize in Economics and professor at universities such as Princeton and CUNY, Paul Krugman, criticizes cryptocurrencies.
American economist Paul Krugman warned investors in cryptocurrencies, saying that they are much like the subprime mortgages that occurred during the real estate crisis in 2007-2008.
In May 2021, he said in an article in The New York Times that Bitcoin was something of a cult, with a lot of believers, and that it had “no significant role in the economy.”
Krugman warned that he was seeing “uncomfortable parallels” between cryptocurrencies and the US subprime mortgage market that crashed in the late 2000s, leading to a global financial crisis and economic downturn:
“There are disturbing echoes of the subprime mortgage crash 15 years ago.”
Krugman said crypto investors are being sold speculative financial products without actually understanding the risk, similar to how banks gave subprime loans to homeowners who couldn’t make the payments.
The bad loans caused significant losses for lenders, causing the financial market to collapse, Krugman said.
Krugman also said:
And cryptocurrencies, with their huge price fluctuations seemingly unrelated to fundamentals, are about as risky as an asset class can get.
In 2018, on Twitter, he compared it to a Ponzi scheme: