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Bitcoin: What Does Mainstream Economics Have to Say?

In his working paper, produced originally with the American Institute for Economic Research, BPI Senior Fellow Josh Hendrickson details how his colleagues might begin to understand this novel technology.

Read the full paper, here.

Abstract

As it relates to Bitcoin, there are several interesting questions to address:

  1. Why does money exist and what role does it play in society? How does bitcoin fit within our understanding of the role of money in society?
  2. What is bitcoin worth?
  3. Is bitcoin (or can bitcoin be) a sound form of money?
  4. Should states or governments be involved? Should they buy bitcoin?

In this paper, I attempt to provide some answers to these questions by drawing on insights from mainstream economic theory.