Cryptocurrency, Bitcoin, and the Concept of Money

Abstract

This chapter will provide a discussion regarding the most popular form of cryptocurrency, Bitcoin. Information will be provided regarding what contributes to the primary status of Bitcoin as evidenced in part by its value in U.S. dollars and dominant marketization levels in comparison to other forms of cryptocurrency. This chapter will also provide a discussion as to the motivational forces behind its development and operational dynamics that contribute to Bitcoin’s potential usage in the economy. Additionally, pros and cons associated with the usage of this type of cryptocurrency will be expanded upon in detail. This chapter will also discuss the previously introduced characteristics traditionally associated with defining money to determine whether cryptocurrency such as Bitcoin is able to meet these standards and, if so, to what degree. Ultimately, Bitcoin’s success will in part be derived from the levels of trust in this cryptocurrency held by system actors in the ability to transact safely, conveniently, and abundantly. Relatedly, the incumbent money problem may increase the degree of difficulty associated with accepting cryptocurrency such as Bitcoin. Ultimately, the proliferation of cryptocurrency such as Bitcoin in the economy will depend on many variables, including societal acceptance and which government regulatory path is eventually established.