NEW YORK (InsideBitcoins) — A general trend that we’ve seen from Bitcoin critics and skeptics over the past few years is that they usually don’t understand the basic premise of Bitcoin. At its core, Bitcoin is a censorship-resistant ledger. This means that the value of the bitcoins on that ledger largely comes from the fact that they can be used for digital transfers of value that cannot be censored. The two best examples of this use case can be seen with donations to Wikileaks and drug purchases on various darknet marketplaces.
“The technology could be valuable, but the currency is worthless”
The above phrase is something that is often repeated by many bitcoin detractors. Skeptics such as investors Warren Buffett, Peter Schiff, and New York Times columnist Paul Krugman all seem to agree on this point. There are many other false statements made by Bitcoin bashers from time to time, but this one seems to be the most prevalent. As Krugman recently stated in a post at the New York Times, “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.”
It’s important to remember that Krugman is also the one who claimed, “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.” He’s also stated that a fake alien invasion would be a viable solution to improving the economy, and the reasons why people continue to take him seriously have been a mystery to me for quite some time.
I suppose we should all feel lucky that we don’t have Krugman centrally planning all of our economic activities.
Krugman says libertarians have conned gullible rubes
Krugman also insinuated that libertarians have “conned” “gullible rube[s]” due to the fact that they’ve been telling others about Bitcoin and why it is important. With the wild swings in volatility, the “rubes” who bought bitcoin at the peak have lost a good bit of money. Putting the blame on an entire group of people with a specific political philosophy seems intellectually lazy. At the end of the day, the people who are buying high and selling low have no one to blame but themselves.
Krugman — a noted liberal — also went on to insinuate that libertarians who promote bitcoin are just as bad as various right-wingers who promote various schemes to “avoid hyperinflation” or “keep Obama from imposing Sharia law.” Krugman seems to miss the point that the value of Bitcoin is not as an investment, but as a complete revolution in money. This is the money of the private, decentralized economy, which is why libertarians and crypto-anarchists are so excited about this technology. The cypherpunks are building anonymous systems. If Krugman wants to talk about scams, he should turn his attention to the altcoin market. There’s plenty to complain about over there.
If Bitcoin has value, then bitcoins have value
Anyway, the moral of the story is that bitcoins must have value if Bitcoin has any value as a technological achievement. If people are going to use Bitcoin for anything at all, they’ll need to purchase bitcoins in order to do so. It’s unknown how Krugman thinks people will take advantage of Bitcoin without owning any bitcoins, but it seems to be a popular meme among individuals who find bitcoin to be worthless.
— Kyle Torpey (@kyletorpey) October 4, 2014
You can follow @kyletorpey on Twitter.
Photo credit: twm1340