Uh, Krugman's whole point is that the capped supply is inherently deflationary so the incentive is to hang on to bitcoins, ie, not the best attribute of a currency.
"Best to have a stable currency with low inflation" grew out of hundreds of years of observations in the history of human production, prices, and mediums of exchange, and what conditions have traditionally leads to periods of peace and prosperity in a region, and what conditions have led to war, revolt, famine, etc.
In short, empirically, wages and prices are sticky. We assume it has something to do with humans being stubborn, but don't really know why. However, until our imminent replacement by the kind robots, currencies must move if people won't.
There are plenty of legitimate arguments that can be constructed against the idea of an inherently inflationary currency too.