Paul Krugman Accuses Bitcoin 'Bitbugs' of Antisocial Tendencies

NEW YORK—Even Paul Krugman has found it impossible not to comment on bitcoin, whose “wild ride may not have been the biggest business story of the past few weeks, but it was surely the most entertaining.” The New York Times’ liberal columnist was decidedly less amused by underlying elements related to bitcoin’s rising popularity, however, and used his Sunday column in a piece titled "The Antisocial Network" to weigh in on the burgeoning mythology surrounding the digital currency, which he described thusly: “When you transfer bitcoins to someone else, it’s as if you handed over a paper bag filled with $100 bills in a dark alley.” Noting right off the bat that “the economic significance of this roller coaster was basically nil,” the Nobel laureate nonetheless cautioned, “The furor over bitcoin was a useful lesson in the ways people misunderstand money — and in particular how they are misled by the desire to divorce the value of money from the society it serves.” Basically, Krugman’s complaint has less to do with what bitcoin is or does than with the practical and philosophical “misconceptions” of its true believers, which includes the Winklevoss twins of Facebook fame. As the “biggest declared investors in bitcoins,” he wrote, “they make claims for the digital product similar to those made by goldbugs for their favorite metal. ‘We have elected,’ declared Tyler Winklevoss recently, ‘to put our money and faith in a mathematical framework that is free of politics and human error.’” Noting that both goldbugs and what he calls bitbugs “tend to share both libertarian politics and the belief that governments are vastly abusing their power to print money,” Krugman identifies the “practical misconception here — and it’s a big one — [as] the notion that we live in an era of wildly irresponsible money printing, with runaway inflation just around the corner. “I know,” he adds, “government officials are not to be trusted and all that, but the truth is that Ben Bernanke’s promises that his actions wouldn’t be inflationary have been vindicated year after year, while goldbugs’ dire warnings of inflation keep not coming true.” More problematically, "The philosophical misconception... seems to me to be even bigger," he writes, adding, "Goldbugs and bitbugs alike seem to long for a pristine monetary standard, untouched by human frailty. But that’s an impossible dream. Money is, as Paul Samuelson once declared, a ‘social contrivance,’ not something that stands outside society.” Identifying “bitcoin evangelists” as people who “want the benefits of the monetary network without the social part,” Krugman concludes without empathy, “Sorry, it can’t be done.”