Paul Krugman bashes Bitcoin, Barrick, gold

Paul Krugman

Paul Krugman | Creative Commons image by Commonwealth Club

It's no secret that famed economist Paul Krugman hates Bitcoin (as a monetary system).

He's been talking about it since back in 2011 when the cryptocurrency was on very few peoples' radars.

"What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin," the economics professor wrote two years ago.

In his most recent column, "Bits and Barbarism," Krugman has even harsher words for the cryptocurrency whose valued has soared over the past few months, reaching an all-time high of $1,240 per BTC in November.

In Krugman's piece – a "tale of monetary regress" as he puts it – the economist identifies three "money pits" – Bitcoin being the second on his list.

Bitcoin only has value because people are willing to buy it because they think other people are willing to buy it, Krugman explains.

"It is, by design, a kind of virtual gold. And like gold, it can be mined: you can create new bitcoins, but only by solving very complex mathematical problems that require both a lot of computing power and a lot of electricity to run the computers," Krugman writes.

"A lot of real resources are being used to create virtual objects with no clear use," he concludes.

Interestingly, the first "money pit" on Krugman's list is Barrick Gold's Porgera open-pit gold mine in Papua New Guinea. The economist criticizes the mine for its reputation of human rights abuses and environmental damage.

Interested in Krugman's third "money pit"? You should probably read it in his words.