I was once a crypto sceptic and sure all this blockchain nonsense would end up being much ado about nothing. My mind has changed. Sovereign nations are now embracing blockchain technology and minting their own cryptocurrencies, and along with sovereign acceptance, enterprises are increasingly accepting cryptocurrency as payment for goods. Innovations in blockchain technology are actually improving economics — not eroding it.

Meanwhile, news media coverage of crypto-currency hacking has generated reasonable public outrage and further skepticism about the crypto markets. Cryptocurrency prices are skyrocketing with breath-taking volatility, confusing legal arguments abound, and politicians are either ranting about or promoting the industry. So, who really knows what to think about all of this?

My concern is that there is an awful lot of misinformation perpetuating over-reactions and betray a collective misunderstanding of how the technology actually works, giving much less attention to the extraordinary benefits afforded all consumers and investors.

This misinformation makes it much harder for regulators to bring sanity to the situation. I support more oversight of the industry by way of clarification of rules and governance, as well as better consumer protection. Governance is one of the primary reasons the United States financial system is the strongest in the world.

Recently a series of editorial essays by Paul Krugman, a noted economist and commentator at the New York Times, laid bare a solid example of common misperceptions about blockchain and cryptocurrency. And this amplified by a powerful publication to which readers rely on as a trusted source of information.

Paul Krugman is propagating misinformation. I urge you to read his essay “The Strange Alliance of Crypto and MAGA Believers” in the January 10, 2022, issue of the New York Times.

It is shocking to read Mr. Krugman’s arguments, especially because he is reasonably expected to offer more discernment and at least more understanding about the topic than is presented here.

Mr. Krugman states, “I’ve been in many meetings in which crypto skeptics ask…for simple examples of things you can do better or more cheaply with cryptocurrency than via other forms of payment. I still haven’t heard a clear example that didn’t involve illegal activity…”

This quote in particular inspired me to write about it. It is as strange as it is untrue that cryptocurrency transactions in general, involve illegal activity. Not one example is noted in his essay to substantiate his claim. Given that, it is hard for me to believe him.

Second to such a bold statement about illegal activity, Mr. Krugman makes misleading statements about “trust”.

He gives examples of how our current money mechanics depend on trusting a third party, e.g. debit cards, Apple Pay, Venmo, and etc. “because they are linked to a bank.” From there he states, “Bitcoin’s whole purpose…was to remove the need for that kind of trust”.

That’s actually misleading. In a blockchain system, a transacting party can actually see if their opposite party has the funds to do any particular transaction. It is a different way to view the concept of trust, because, yes, trust is irrelevant when the other party is required to be ‘over collateralized’ which Paul fails to mention. Because he fails to mention this critical aspect of blockchain technology, he perpetuates misinformation and contributes to confusion.

Blockchain, especially DeFi technology, provides a much faster and more efficient method of transacting. It removes the so-called ‘middlemen’ out of the transaction, and say like for loans or mortgages, transactions can occur in seconds instead of weeks or months. And — again: all of this is predicated on over-collateralization to power the system. Transparently.

How much transparency is offered by our current financial system? Other than higher reserve requirements for investment banks and other large financial institutions after the 2008 global financial crisis, I don’t consider the system to be any more transparent than it was in 2007. (Admittedly, this is a blanket generalization on my part, so I intend to elaborate on this issue in a subsequent essay). What regulations currently exist to curb OTC (over the counter) abuses, these were ‘reactive’, not proactive which really means, that until the global economy came to a standstill, regulators didn’t do their jobs. These are amongst the catalysts that led to blockchain technology. A relatively safe and transparent way to bring sanity to the global capital markets.

But most disturbing is how Mr. Krugman obsesses over the right wing, in that he claims right-wingers have a strong connection with bitcoin and like it for what he alleges is a hiding place. This is an insinuation: that participation in cryptocurrency technology is the domain of dark actors. To be sure, he makes an ‘assumption’ about the opposite side of the aisle. I can’t help but wonder if this is to downplay or sanitize his own bias. He says, “while also [probably] inducing public figures like Eric Adams, New York’s new mayor, to talk up Bitcoin because they imagine it makes them appear forward-looking.”

There are so many other errors and weaknesses here, but I will leave it at gold bullion. It was President Richard M. Nixon, a republican, irrefutably a staunch conservative, who removed the U.S. Dollar from the gold standard, yet Mr. Krugman chooses to mention a so-called traditional association between conservatives and gold, and as stated above, without substantiation.

I hope that more people will pay attention to these unfolding events and notice when distortion and misinformation is driving the issue and its debate. I support stringent regulation that will lead to consumer protection for cryptocurrency transactions. But misinformation will make it harder for legislatures to bring clarity and guidance to this industry.

This is an amazing time and as was said in the 1990s about the internet, we haven’t even seen the tip of the iceberg with cryptocurrency and blockchain technology. The world as we know it is about to change, and for the better.

If you care about the issue of the cryptocurrency phenomenon, I urge you to follow my commentary and join the discussion. In mine and others’ opinions, cryptocurrency and blockchain technology is very much like the early days of the Netscape web browser in the early 1990s.

I would be grateful for your insights and opinions too.