Tuesday, October 4, 2011

Bitcoin and monetary policy

It's behind a paywall, but the 10/10/11 issue of the New Yorker, "The Money Issue," includes a fascinating article by Joshua Davis on Bitcoin, the electronic currency without a central bank. Paul Krugman recently weighed in about Bitcoin and its tilt toward inspiring deflation, hoarding, and a credit crunch.  Bloggers responded with some disdain.  A Times article earlier this summer described some "speed bumps" in the plan.

Bitcoin seems to fit in well with the Occupy Wall St. flavored dissatisfaction with government and central banks in particular.  But after reading Davis's piece, it's hard to believe that Bitcoin is a great idea.  The 21st Century Bitcoin prospector profiled in the piece isn't panning for gold, he's investing in computer hardware that fills a room to "mine" Bitcoins.  That doesn't seem like a very productive use of time.