Mint Explainer: How the world of cryptos unravelled4 min read . Updated: 05 Dec 2022, 12:40 PM IST
- The crypto crisis highlights the imperfections of a free market, like the Lehman collapse did in 2008.
Adam Smith, the father of modern economics, believed in laissez-faire. Free markets, Smith argued, can regulate themselves through an interplay of competition, supply and demand, and self-interest. And yet, as the world discovered in the wake of the Lehman Brothers collapse in 2008 and the ensuing global financial crisis, capitalism has its imperfections. Markets need regulatory oversight to deliver the maximum good for the maximum people. That perhaps explains why an unregulated crypto market faces its biggest crisis yet. Tumbling crypto prices and a collapse of some exchanges beg the question: do investors and traders, in India and across the world, really needs cryptos?
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