Bitcoin Monetary Characteristics Essay

Excerpt from Essay :

Money functions as a placeholder in any economic system; it does not have value outside of what its users place in it as a system of exchange. As noted by Asmundson & Oner (2012), the creation of money is one of the most significant developments in human civilization. Without money, human beings would be reduced to bartering for goods and services. While this may be feasible on a small-scale, community basis, this is not true for a national economy. For many centuries, gold and silver were the primary means of universal exchange, and all national currencies were linked to the possession of precious metals. But “eventually, the paper claim on the precious metal was delinked from the metal,” and paper money became common, although “fiat money is materially worthless, but has value simply because a nation collectively agrees to ascribe a value to it” (Asmundson & Oner, 2012, par. 10). Advocates of Bitcoin, which is a cryptocurrency not linked to any specific nation, argue that it is the next, natural step in the development of new monetary systems in the global Internet age.

It should be noted that on a very basic level, anything can function as money, provided the two individuals involved in the exchange agree to the transaction. This is true of shells and beads as much as it is for Bitcoin. What is unique and new about Bitcoin is the fact that it is the product of the Internet age of global commerce specifically for online transactions. It dates back to 2009, and, “Transactions are made with no middle men – meaning, no banks,” which is its greatest advantage, according to its supporters (Yellin, Aratari. & Pagliery, 2016, par.1). Since its birth, it has become more and more accepted in everyday transactions on popular sites such as Expedia and Overstock. It advertises itself as an anonymous currency, which is of interest in an era where there is great anxiety about revealing information online, although it has primarily been used as a source of speculation and investment than an actual currency until recently (Yellin, Aratari. & Pagliery, 2016). The concern, of course, is that a currency which is not linked to a particular nation will not have stability or real functionality if individuals cease to show interest in it.

According to the Wharton School (2017), Bitcoin has the ability for individuals to create separate economic entities…

Sources Used in Document:

References

Asmundson, I., & Oner, C. (2012). What is money? IMF Journal, 49 (3). Retrieved from: http://www.imf.org/external/pubs/ft/fandd/2012/09/basics.htm

Gandal, N., Hamrick, J., Moore, T., & Oberman, T. (2018). Price manipulation in the Bitcoin ecosystem. Journal of Monetary Economics. Retrieved from: Is blockchain the next great hope or hype? (2017). Wharton School. Retrieved from: http://knowledge.wharton.upenn.edu/article/blockchain-next-great-hope-hype/

Yellin, T., Aratari, D. & Pagliery, J (2016). What is Bitcoin? CNN. Retrieved from: http://money.cnn.com/infographic/technology/what-is-bitcoin/


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