A Study on the Characteristics of Bitcoin

Abstract

The purpose of this paper is to analyze the characteristics of Bitcoin, focusing on the function of money. This paper includes, first of all, a comparison of various theoretical discussions made by economists on Bitcoin, defined as peer-to-peer electronic cash system. Secondly, this paper includes an analysis regarding the four unique incidents, which represent the four salient features of Bitcoin, occurred in Bitcoin’s history. The conclusion of this paper can be summarized as follows: Taking all discussions into consideration, it seems to be uncertain for Bitcoin to be regarded, at least at this moment, as new money because of its high price volatility. But, it should be emphasized that Bitcoin has played well as a medium of exchange. In spite of this uncertainty, Bitcoin’s contribution toward network money is not small at all. The most important contribution is that the technology behind Bitcoin could support a revolution the way people own and pay things. Second, Bitcoin is the first, global, single currency which can be accepted worldwide in real world as well as cyber world.