Krugman is now hedging:
Do you think Bitcoin will gain momentum and become a viable currency?
No. I could be wrong, but Bitcoin is harder to use than other forms of electronic payment, and lacks any fundamental source of value (unlike dollars, which can be used to pay taxes). It’s possible that Bitcoin will somehow become self-supporting, but for now my guess is that it’s largely a fad that will collapse one of these days.
http://www.princetonmagazine.com/paul-krugman/
Do you think Bitcoin will gain momentum and become a viable currency?
No. I could be wrong, but Bitcoin is harder to use than other forms of electronic payment, and lacks any fundamental source of value (unlike dollars, which can be used to pay taxes). It’s possible that Bitcoin will somehow become self-supporting, but for now my guess is that it’s largely a fad that will collapse one of these days.
http://www.princetonmagazine.com/paul-krugman/
This is the error which is obvious to many here, but not many mainstream economists.
Bitcoin has enormous fundamental value because of its utility. Rapid, global, transfer of monetary value without third-party intervention, is fundamentally of value. The security of the system, through mining, and the cap on total issuance are pillars which makes the technology monetarily viable.
There is a subtlety here: the stored value of Bitcoin derives from its ability to transfer value.
Eventually Krugman will figure this out, but it will be hard to accept as he will still cling onto the inflation-is-good meme.
What gets me about his comments is even in the field of mainstream economics the utility of bitcoin should apparent. Cyperdoc linked to a paper a while ago (couldn't find it) where a FED board member referred to fiat money as a historic "technical invention".
My initial response to this "technical invention" comment was very negative. I thought it was absurd to refer to fiat as a technology. But the more I thought about it the more it started to make sense. Bitcoin people talk about money as a ledger, and if you compare central bank fiat to physical gold, then in many ways it is easier to transact in and does function as a better ledger. Fiat's core failing is there is no limit on that ledger similar to what gold has, but the ability to transact in the "fiat ledger" is much easier than in the "physical gold ledger". From that perspective fiat is superior to gold. I never understood this until reading that "technical invention" comment.
So if mainstream economists see fiat money as a "technical invention" that has more utility over gold by being a ledger that is easier to transact in, then they should be able to see bitcoin as a superior "technical invention" since it has more utility over fiat by being a ledger that is even more easier to transact in (i.e. programmable money).
The fact that mainstream economists don't, makes me believe that either: a) they are ignoramus who don't understand their own field or b) are paid shills.
When it comes to Krugman, I would probably vote "ignoramus".
Btw, I love that word. It always brings to mind "ignorant anus", which in this case, perfectly describes Krugman.
He should really go down the toilet of history, when reality calls. But these flock people slip out of your hands like eels. When they are wrong, they can hide behind each other in turn, saying this was completely unforeseeable. He will probably get his second Sweedish Riksbanks economic price to the memory of Alfred Nobel, after the crisis have flattened civilization. Nobel hated economists, for a reason.
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