“I’m part of the crypto-skeptic community, I guess you would say,” said economist Paul Krugman, who opened a 30-minute conversation with Binance CEO Changpeng “CZ” Zhao.
Krugman may have underestimated his stance on cryptocurrency and blockchain, writing last week a The New York Times A column in which he says the hype around cryptocurrency and blockchain technology is a “tragedy” that has led to “waste on an epic scale.” He was indeed a perfect sparring partner for CZ for the online class. MasterClass provided Decrypt Access to the fifth lesson, which contained the expert pair.
“Our rap has always been that we can’t see what problem cryptocurrency solves, what it really does and doesn’t really do, or how it can solve it — to the extent there is a problem — better than other, more traditional methods,” he says. Says.
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Zhao responded by pointing out that the original concept of bitcoin and cryptocurrency was to provide a new way to transfer value, in the same way that the Internet is a new way to share information.
“Bitcoin, specifically, is a slightly better form of money — it solves some of the problems we have with money today from limited supply, not easy to use, not much freedom and not very low fees,” Zhao said. If you are considering global trade, international remittances, remittances, micro payments, etc.
“To be very honest with you, the first Bitcoin use case was conceived as payments, but it didn’t work. But other use cases did.
CZ noted crypto’s potential to raise millions of dollars in funding and revenue streams for artists using non-fungible tokens, or NFTs.
“It’s a global fundraiser. It’s easier for entrepreneurs to raise money globally.” “Using cryptocurrency, a reputable entrepreneur can raise the equivalent of $10 to $20 million in cryptocurrency in just a few days.”
Krugman remained skeptical.
“I’m baffled — it’s not clear why the blockchain itself makes it so easy to raise money,” Krugman said, noting that the idea might seem like an advantage just because of the cryptocurrency’s popularity.
“I think the biggest difference is the cross-border nature of this technology,” Zhao said, noting the difficulty of making cross-border payments through traditional banking. “Blockchain offers that, and I think that is the main reason.”
The Binance CEO pointed to the global disparity in economic opportunities, citing the booming economy of the United States versus China, Vietnam, and African countries.
“It’s very difficult for someone outside the US to transfer money there because of international SWIFT fees, etc,” Zhao said.
“But [that isn’t] Not a technical problem, but a regulatory issue,” replied Krugman. “Isn’t it just a basic way of getting around regulations that governments, for whatever reason, have seen fit to put in place?”
While regulations are part of the problem, Zhao said he believes it is an inherited problem and an issue with the high cost of sending money from one country to another.
“There is nothing to prevent us from investing in a project, someone in Dubai should invest in a project in South Africa,” he said. “But the mechanisms for doing so are very difficult for traditional financial services.”
Zhao said that as technology makes the world smaller, entrepreneurs can access a global pool of liquidity using blockchain technology.
“Why don’t we just reform the banking rules?” Krugman asked, comparing the cellphone problem to how two US carriers can have different policies in the same regions.
Krugman also questioned how long it took for Bitcoin to be adopted compared to innovations like the Internet, saying that the argument that cryptography is still new is outdated.
“If you were to compare it to the internet in 1995 and 2008, we all live on the internet,” Krugman said. Bitcoin was created in 2009, 13 years ago.
Zhao acknowledged that Krugman made a good point, but noted that what we now know as the Internet developed in the 1960s with the US Advanced Research Projects Agency Network, or ARPANET, followed by the US military’s use of email in the 1980s.
“It appears that the problem is with governments and regulations, not technology,” Krugman replied, indicating that he would become a believer in cryptocurrency if he could get through immigration faster when he travels to Europe. Pointing to the ease with which travelers using Global Entry can enter the US, he added, “The problem is that it is not transferrable and blockchain will not help.”
Many cryptocurrency enthusiasts refer to the 2008 financial crisis as the necessity for Bitcoin to work and the industry that spawned it. But many questioned the practicality of expecting the average person to understand the technology and its economic implications.
“What’s interesting is that after 2008 and all these disasters, and we didn’t respond with education, we responded with regulation, we responded with Dodd-Frank, with things that basically tried to get more of the financial system under the umbrella of hedging,” Krugman said.
“Shouldn’t the lesson from all of this be to not expect high school students to come out and understand all that stuff you’re talking about?” Asked.
“It’s not black and white,” Zhao replied. “I think from a regulatory perspective it’s important that regulations continue to evolve with new technology, new industries, to protect consumers, I think it’s essential.”
At the same time, people should learn to protect themselves, Zhao added.
There is no perfect solution. I am not saying that education will solve all problems, [but it would] Zhao said.
There will be a gradual expansion of the regulatory network, Krugman said, adding that he believes most cryptocurrencies are used to avoid and evade regulation. However, he believes that cryptocurrencies will survive, “but will not be distinguished from mainstream finance.”
Founded in 2004, MasterClass is an American online education subscription platform that provides pre-recorded lessons and lectures by experts in various fields. The MasterClass “Crypto and the Blockchain” also includes sessions led by Coinbase President and COO Emilie Choi and Chris Dixon, General Partner at Andreessen Horowitz.
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