The article fails on the basic premise that government activity in the economy is self-evidentially "bad" and non-government activity in the economy is self-evidentially "good". Government activity versus private activity is no more or less bad than the other.
Take Denmark. Something like 55% of the population works for the government. Yet nobody would compare that country to, say, Russia. Or Egypt. Or Syria. The article is just pure ideology on its face. Which is to say, it's all about people wishing to fit reality into their own bias, not examine reality to form a testable hypotheses.
Actually, if you read the article, the author conveniently lays out the premise in the second paragraph:
For its users, money has three classic functions: a medium of exchange, a unit of account, and a store of value. For its government producers, money has three other functions: a source of seignorage, a means of taxation, and a lever of macroeconomic influence. Theses various purposes can sometimes conflict, so tension arises when a monetary innovation appears that better serves some stakeholders than others.
Your statement that the article is about "people wishing to fit reality into their own bias" is quite ironic given the fact that your summary is not at all consistent with the actual premise of the article -- that Krugman's interests are not well served by Bitcoin, and that he's responding accordingly.
Take Denmark. Something like 55% of the population works for the government. Yet nobody would compare that country to, say, Russia. Or Egypt. Or Syria. The article is just pure ideology on its face. Which is to say, it's all about people wishing to fit reality into their own bias, not examine reality to form a testable hypotheses.