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Comment by lend000 | Hacker News Reader

Painful to read. Paul Krugman is a laughing stock in the crypto-world, which he has been wrong about so confidently, so many times.

As an aside, the US had active monetary policy for about a century, and it has enjoyed plenty of bubbles and crashes. Some of those were worsened by monetary policy (e.g. easy money in the early 1920's swapped to deflationary monetary policy in 1929 as soon as the easy money bubble popped, low interest rates fueling real estate speculation in the early 2000's, etc.)

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Can you give an overview of or pointers to critiques? My prior is that Krugman is more likely to by correct than the average crypto person, even after adjusting for interest in and attention to crypto.

For a celebrated economist, Krugman has a poor grasp of certain facets of economics. It's probably a subconscious way of rectifying his political views, which many of us are guilty of.

In this case, he does not understand how Bitcoin can be a store of value, because it is not backed by a government. How come gold or any other commodity has value? Value it what the market decides, not the government. He obviously did not understand the intrinsic value the technology provides, which previous media of exchange do not provide, such as immutability and full control of funds. He is happy to pass judgment without understanding the technology.

How are immutability and “full control of funds” intrinsically valuable?

That's like asking why laws firms & and security agencies exist.

Intrinsic value has a well-understood meaning in economics. Bitcoin, like any currency, has no intrinsic value, regardless of these neat features.

> Intrinsic value has a well-understood meaning in economics. Bitcoin, like any currency, has no intrinsic value, regardless of these neat features.

I don't think you understand the definition of intrinsic value -- it has nothing to do with being physical:

https://www.investopedia.com/terms/i/intrinsicvalue.asp

Key quote: "The intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.

Where did I imply intrinsic value requires physical presence? Businesses produce cash flow, and therefore ownership stakes (stocks) have intrinsic value. Gold is used in manufacturing and has an intrinsic value (lower than its traded value). Bitcoin has 0 intrinsic value. This is not a slight against Bitcoin, it's just a property of most currencies. Bitcoin is no exception.

A good thought experiment for whether something has intrinsic value is: would <thing> still be useful if nobody else on the planet wanted it? A share in a business would continue paying out dividends, and would absolutely be useful. A dollar bill would be useless (especially if it's an electronic dollar). A bitcoin would also be absolutely useless.

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