Recently, Kathryn Haun, former Federal Prosecutor, and Paul Krugman, a Noble Prize winning economist had a ‘Let’s settle this’ debate about the intrinsic value of Bitcoin and other cryptocurrencies.
During the debate, Paul Krugman spoke about Bitcoin and compared the biggest cryptocurrency to the early stages of the Internet. Krugman remarked that he was surprised about the current use case of the Internet. He further added that he “underestimated” the useful functions of the Internet. There were clear indications of the use case of the Internet from the beginning, however, this is currently missing in cryptocurrencies, he said.
This was followed by Kathryn Haun speaking about the price and volatility of Bitcoin. She remarked that the cryptocurrency has been in the space for 10 years now and that she also felt that if everybody decided that the coin had no value, then it would indeed not have an intrinsic value, in the earlier year. She further said:
“I think now what we’re seeing is the price is the volatility is lessening and I grant you there’s still a lot of volatility I think things like stable coins are really interesting and really important to this ecosystem to hedge against that volatility”
To this, Krugman said that considering the factor of the coin existing for 10 years, it has “very little application” in terms of actual payments. He added that the daily transactions of Bitcoin are “tiny” in comparison to the US Dollars foreign exchange market alone. He said:
“We can tell the dollar value of Bitcoin transactions peaked at the beginning of this year and that’s actually fallen substantially since then. There’s very little sign that it is becoming any kind of widespread means of payments and that’s ten years on. So when is that going to happen?”
Kathryn Haun replied that even though it has been 10 years since the release of the whitepaper, people started to notice Bitcoin, later on, she said. This includes the governments and mainstream institutions, which considered cryptocurrencies as a tool for criminal activities.
She further added that the perspective is changing among more traditional sectors. Kathryn said that cryptocurrencies are viewed as an alternative for payments. However, Bitcoin has not achieved Satoshi Nakamoto’s vision – electronic peer-to-peer cash system for payments. She said:
“[…] it’s main use is certainly not that. However, Bitcoin Cash is trying to do that. The reason Bitcoin is been held back aside from volatility is the scaling. And right now, you have things like the Lightning Network, which are being built and Lighting Network is aiming to increase the ability to use Bitcoin for payments”
Kathryn continued to say that Bitcoin would probably not be used for payments and some other cryptocurrency can be used for payments.
This was followed by Krugman remarking that this was “bad” for the structure of Bitcoin and the gains in energy efficiency get “swallowed up very quickly”.