Paul Krugman Ignorantly Calls Bitcoin “The Long Cryptocon”

Caleb Chen @bitxbitxbitcoin
October 4, 2014

American Economist Paul Krugman has written another anti-Bitcoin piece that, believe it or not, is much less accurate than Krugman’s original Bitcoin article released in late 2013 on the New York Times, titled Bitcoin is Evil. In the “evil” article, Krugman didn’t support his titular claim within the text of the opinion article. In fact, it’s almost as if he wrote his article in response to Charlie Stross’s wish for a quick and fiery Bitcoin death, and added the title as a joke. Krugman specifically referred to his analysis of “Bitcoin” as a positive one, which he was trying to maintain neutrality on.

Unfortunately, the Bitcoin community, largely led by a subreddit that often comments, votes, and condemns based solely on a title and without ever reading the text, seems to have scared Krugman with “rage-filled missives.” The next day, Krugman concluded that Bitcoin users were without humor, which is usually indicative of “intellectual insecurity.” The stench of elderberries was high and nigh.

Also read: If Robert Shiller Really Thinks Bitcoin Is a Bubble, He Will Be Publishing a Book about it

Krugman’s Economic Concerns

As presented in his 2013 New York Times OpEd, Krugman voiced the most valid of economic concerns surrounding Bitcoin’s longevity: its use as a store of value. Krugman feels that since Bitcoin can’t be turned into a necklace, its value is unreal. A quick glance at the Bitcoin price charts will inform you that Bitcoin has not done well as a store of value over the course of this year. In fact, since Krugman’s last article, the price has dropped significantly (a fact that Krugman was quick to point out in his most recent article). However, as time goes on, we are seeing that Bitcoin’s price is becoming more and more stable. Obviously, in this nascent state, Bitcoin is still volatile and will manifest its other monetary features (medium of exchange) prior to becoming a good store of value. While Krugman’s concern is valid and a welcomed sobering opinion to consider for Bitcoin enthusiasts that have zero economics training, calling Bitcoin a Long Cryptocon is one stretch too many.

Krugman’s Unfounded Concerns

In his article titled The Long Cryptocon, Krugman drew the comparison between Bitcoin and right-wing, conservative, direct-mail scams. Bitcoin is a lot more similar to gold in this aspect, a “commodity” that is in the wild that has an agreed upon use. He states:

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. But the psychology and sociology of the phenomenon are the same old same old.

Krugman’s suggestion that Bitcoin is sold, or forced, upon individuals with anti-government leanings in the same way that direct-mail fundraising campaigns often prey on the technologically-illiterate is insulting to say the least. What it really shows is a lack of effort from Krugman’s part to understand Bitcoin, or anything besides top-down economics. Krugman, at this point, has finally admitted that Bitcoin solves an interesting information problem: The fact that he isn’t sure if this revolutionary development has “any economic value,” should remind you that Krugman admittedly knows nothing about computers, the dangers of centralization, or bleeding edge technology similar to the Internet.

Images from Shutterstock.

Last modified (UTC): October 4, 2014 21:31

Caleb Chen @bitxbitxbitcoin

Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He is currently pursuing his MSc in Digital Currency at the University of Nicosia.