It's still unclear if Bitcoin can be a reasonably stable store of value
Bitcoin Is Evil — It's always important, and always hard, to distinguish positive economics — how things work — from normative economics — how things should be. Indeed, on many of the macro issues I've written …
Context & Ripple Effects
By late December 2013, the economist debate over Bitcoin had moved from novelty to substance. In April, TechCrunch surveyed how five real economists thought about Bitcoin's future, and by December the Economist was arguing that Bitcoin's own success was putting it under growing strain while Sam Altman contended it would only succeed if legitimate transaction volume ramped up.
Paul Krugman's 'Bitcoin Is Evil' column lands squarely in that argument, and its syndication trail shows the reach: pickups across Business Insider and Forbes plus commentary from investors like Fred Wilson and Tren Griffin. His core move is methodological — insisting on the distinction between positive economics (how Bitcoin works) and normative economics (whether it should work) — with his stated conclusion being that whether Bitcoin can be a reasonably stable store of value remains unclear.
First-order effects
- The column forces Bitcoin's prominent investor-defenders — Fred Wilson and Tren Griffin among those commenting publicly — to respond on Krugman's terms: not whether Bitcoin is clever, but whether an asset this volatile can function as a store of value.
- Mainstream readers encounter Bitcoin framed through an explicit positive/normative split, shifting the public conversation from hype toward testable economic claims.
Second-order effects
- Proponents' rebuttal path narrows toward the transaction-utility argument already circulating that month — Altman's claim that legitimate transaction volume is the real success condition — because 'store of value' alone concedes Krugman's point about volatility.
- The Economist's December warning that Bitcoin's growth strains its own design gives critics like Krugman empirical ammunition, raising the bar for what Bitcoin advocates must demonstrate beyond price appreciation.
Third-order effects
- If the volatility problem persists, the industry's legitimacy case has to rest on payment utility rather than appreciation — making transaction volume, not exchange-traded price, the metric on which mainstream institutional acceptance turns.
- Economists engaging Bitcoin through the positive/normative lens sets a template for how legacy financial institutions and policymakers evaluate cryptocurrency claims: skepticism anchored in monetary theory rather than dismissal.
The trend: Bitcoin's fate in mainstream economics is converging on a single test — whether volatile assets built for payments can double as stable stores of value — with legitimacy hinging on real transaction demand.