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Comment by ubernostrum | Hacker News Reader

He poses a question:

To be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why BitCoin should be a stable store of value.

And then says he hasn't been able to get an answer to this question, that the BitCoin enthusiasts he's talked to have mostly avoided trying to answer the question, and that he has reason to suspect that BitCoin gets promoted not because it is useful as a currency but because it pushes the right ideological buttons for some people.

And, one must admit, it is a perfectly legitimate question to ask when considering something's usefulness as a currency.

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> To be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why BitCoin should be a stable store of value.

So maybe BitCoin isn't money? We already have something that is a reasonably stable store of value but is not a medium of exchange (gold), so why can't we have something that is a medium of exchange but not a reasonably stable store of value?

Gold is no longer widely used as money, but in the past it was, and was quite successful as a medium of exchange.

His argument seems to be that if you want something to be genuinely useful as money, it has to do both reliably, and BitCoin only seems able to do one.

In the past yes, but I'm talking about today. Gold is a stable store of value that is not really used as money (at least in the U.S.)

Gold is also a lot more volatile than most currencies, which in turn makes it less suitable as a currency than dollars or euros.

A trait gold shares with bitcoin. The volatility makes it terrible as a currency, not to mention the expected rise in value. That makes BTC even worse as a currency - there is no sane reason to spend bitcoin if you believe in the concept.

And I don't think you're disagreeing with him. I think you're trying to say "well, this other thing that doesn't get used as money anymore also doesn't fit his definition of money" and then implying that this somehow disproves his argument.

When, in fact, it lends support to his argument.

I'm not saying it disproves his argument, just that BitCoin could theoretically be useful even if it's not money. Which is sort of tangential to his point - I'm suggesting that the money angle is perhaps overrated or a red herring.

The answer I've heard is that Bitcoin has utility as a payment network somewhat independent of its usefulness as a value store. This is most of how Bitcoin is used currently (save speculation)

And yet, Krugman is probably right to suggest that, as a currency, BitCoin will need to also be a store of value. Which it currently does not seem to be, and I don't see how it will become one.

He could be right, he'd just be missing the point. He's trying to jam a square peg into a circular hole and calling it "evil" for not fitting.

What I'd actually be interested in reading is a proposal from Krugman (or someone else) for a hashcash/cryptocoin/digital money scheme that addresses their concerns.

It would be hugely more interesting to hear economists discuss how new technology can advance antiquated, federated payment networks rather than pointing out well-known flaws in a very immature technology (that I'm still not entirely convinced they understand, technologically speaking).

Perhaps he doesn't see a need for a cryptocurrency, and so does not feel obligated to propose one.

"(save speculation)"? That's a huge save.

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