Economic Nobel Laureate Paul Romer, who won the prize in 2018 with William Nordhaus for work on integrating innovation and climate with economic growth, has offered his thoughts on today’s cryptocurrency economies.
Romer, sharing an opinion with many other experts, believes that there is great potential in blockchain technology, but not so much for cryptocurrencies — if they continue to work the way they do today.
As Cash reported, the Nobel Laureate holds an opinion that, for some, is precisely the reason why cryptocurrencies are so valuable:
It is unimaginable to establish a system in which we trust only one code. These are deal breakers in such systems, which then collapse. Trust is always necessary in such systems, and trust will always depend on knowing the people who are responsible for such systems, along with their reputation and past.
Romer made the remark at a presentation at the Institutional Money Congress in Frankfurt on Wednesday, and derided the fact that there are some instances in which Bitcoin can be double spent, such as in a recent Bitcoin ATM attack in Canada.
For many, the fact that Bitcoin relies on pure code and not on any human interaction is the most salient feature of the technology, as it avoids all the centralization weaknesses that come with human interaction. Cryptographic proofs are all that are required to ensure trust, these advocates believe.
As long as the Bitcoin code is bug-free and refined, it enforces trust in a very impartial way.
Unlike some other economists, Romer is far more welcoming of the technology and its ability to revolutionize industries like the supply chain, where he sees the tracing of food through the the transparency blockchain provides as having real development potential.
Individuals like Nouriel Roubini, however, are far more hostile towards cryptocurrencies, and see it as a bubble that will eventually burst. Roubini recently remarked that that “cryptocurrency as a technology has no basis for success.”