Op-Ed: Paul Krugman is Wrong – Bitcoin Has Been a Stable Store of Value for over Half a Decade
There are plenty of legitimate economic arguments against Bitcoin. A level of inequality that makes the U. S. look like a ‘workers’ paradise’ is one. The possibility that mining will continue to become more centralized is another. And, while I don’t buy it myself, concerns over the protocol’s deflationary nature are justified if one believes that our collective understanding of economics and monetary policy will be at the same level in 2140 as it is today.
So when I saw that Paul Krugman had written another piece attacking Bitcoin, I was surprised by his justification. With so much else to attack, he continues to focus on a technicality
In The Long Cryptocon, Krugman writes:
‘Bitcoin may be sold as a technical marvel, and it does indeed solve an interesting information problem – although it’s not at all clear whether solving that problem has any economic value.’
The issue of Bitcoin’s ‘value’ has been a long-running theme with Krugman. In last December’s Bitcoin Is Evil, he wrote:
‘I have had and am continuing to have a dialogue with smart technologists who are very high on Bitcoin – but when I try to get them to explain to me why BitCoin is a reliable store of value, they always seem to come back with explanations about how it’s a terrific medium of exchange. Even if I buy this (which I don’t, entirely), it doesn’t solve my problem.’
This is not an uncommon argument against Bitcoin. A while back, I wrote an article about why economists hate the subject. The whole thing was inspired by a letter I sent to an old professor, asking for their opinion on the phenomenon. ‘I am not interested in talking about Bitcoin,’ they responded, ‘after its market collapse this week…I don’t think there is much to credibly say about it as a store of real value.’
This post was published at Coin Telegraph on 2014-10-16.