Bitcoins as legal tender

An Evaluation from an Economic Perspective

Auteurs

• Jochen Kasper

Paramètres

• Affaires et économie

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Bitcoins continue to gain popularity both in media and reality, existing solely in a virtual space without regulation. Their maximum circulation is predetermined, theoretically making them inflation-proof. Being entirely digital, Bitcoins are divisible, ensuring their limited supply does not hinder their potential as a global means of exchange. Transactions are rapid, anonymous, and nearly cost-free, presenting a revolutionary appeal. However, high volatility attracts speculators and questionable players. The path to mainstream adoption is improving, with more goods and services becoming available for purchase. The internet's "gold rush" has drawn venture capital and hedge funds, leading to the establishment of Bitcoin ATMs. Governments, including the American Congress, are examining the implications of Bitcoin usage due to emerging issues in the value creation chain. This study investigates whether Bitcoins can serve as legal tender from an economic standpoint. It highlights the key characteristics of anonymity and lack of central control, which may resonate with tech-savvy users but not the general population. Significant differences in volatility and value stability suggest that Bitcoins may not meet the essential criteria for legal tender. Nonetheless, they reveal potential drawbacks of state-regulated currencies, prompting critical evaluation of their role in the financial landscape.

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• Année de publication: 2017